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Monetary commitment and the level of public debt
Gnocchi, Stefano; Lambertini, Luisa - 2016
We analyze the interaction between committed monetary policy and discretionary fiscal policy in a model with public debt, endogenous government expenditures, distortive taxation and nominal rigidities. Fiscal decisions lack commitment but are Markovperfect. Monetary commitment to an interest...
Persistent link: https://www.econbiz.de/10011431600
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Downward nominal wage rigidity meets the zero lower bound
Amano, Robert A.; Gnocchi, Stefano - 2017
We add downward nominal wage rigidity to a standard New Keynesian model with sticky prices and wages, where the zero lower bound on nominal interest rates is allowed to bind. We find that wage rigidity not only reduces the frequency of zero bound episodes but also mitigates the severity of...
Persistent link: https://www.econbiz.de/10011637421
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Understanding firms' inflation expectations using the Bank of Canada's Business Outlook Survey
Richards, Simon; Verstraete, Matthieu - 2016
Inflation expectations are a key determinant of actual and future inflation and thus matter for the conduct of monetary policy. We study how firms form their inflation expectations using quarterly firm-level data from the Bank of Canada's Business Outlook Survey, spanning the 2001 to 2015...
Persistent link: https://www.econbiz.de/10011433529
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Central bank communications before, during and after the crisis : from open-market operations to open-mouth policy
Vayid, Ianthi - 2013
The days when secrecy and opacity were the bywords of central banking are gone. The advent of inflation targeting in the early 1990s acted as the catalyst for enhanced transparency and communications in the conduct of monetary policy. In the wake of the 2007 - 09 global financial crisis, this...
Persistent link: https://www.econbiz.de/10010202233
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Limited commitment, endogenous credibility and the challenges of price-level targeting
Cateau, Gino; Shukayev, Malik - 2018
central bank with such discretion undermines the credibility of the price-level target and weakens its effectiveness to … stabilize the economy through expectations. The endogenous nature of credibility also brings novel results relative to models … with exogenous timing of target resets. A much higher degree of credibility is needed to realize the stabilization benefits …
Persistent link: https://www.econbiz.de/10011946949
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Gazing at r-star : a hysteresis perspective
Beaudry, Paul; Kartashova, Katya; Meh, Césaire Assah - 2023 - Last updated: January 12, 2023
Many explanations for the decline in real interest rates over the last 30 years point to the role that population aging or rising income inequality plays in increasing the long-run aggregate demand for assets. Notwithstanding the importance of such factors, the starting point of this paper is to...
Persistent link: https://www.econbiz.de/10013482643
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Changes in monetary regimes and the identification of monetary policy shocks : narrative evidence from Canada
Champagne, Julien; Sekkel, Rodrigo - 2017
We use narrative evidence along with a novel database of real-time data and forecasts from the Bank of Canada's staff economic projections from 1974 to 2015 to construct a new measure of monetary policy shocks and estimate the effects of monetary policy in Canada. We show that it is crucial to...
Persistent link: https://www.econbiz.de/10011777945
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Could a higher inflation target enhance macroeconomic stability?
Dorich, José; Labelle, Nicholas; Lepetyuk, Vadym; … - 2018
Recent international experience with the effective lower bound on nominal interest rates has rekindled interest in the benefits of inflation targets above 2 per cent. We evaluate whether an increase in the inflation target to 3 or 4 per cent could improve macroeconomic stability in the Canadian...
Persistent link: https://www.econbiz.de/10011814250
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Housework and fiscal expansions
Gnocchi, Stefano; Hauser, Daniela; Pappa, Euē - 2014
We build an otherwise-standard business cycle model with housework, calibrated consistently with data on time use, in order to discipline consumption-hours complementarity and relate its strength to the size of fiscal multipliers. We show that if substitutability between home and market goods is...
Persistent link: https://www.econbiz.de/10010386697
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What to target? : insights from a lab experiment
Salle, Isabelle L. - 2021 - Last updated: October 28, 2021
This paper compares alternative monetary policy regimes within a controlled lab environment, where groups of participants are tasked with repeatedly forecasting inflation in a simple macroeconomic model featuring only the dynamics of interest rates, inflation and inflation expectations....
Persistent link: https://www.econbiz.de/10012657866