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Expectations-driven liquidity traps : implications for monetary and fiscal policy
Nakata, Taisuke; Schmidt, Sebastian - 2019
We study optimal monetary and fiscal policy in a New Keynesian model where occasional declines in agents' confidence can give rise to persistent liquidity trap episodes. Unlike in the case of fundamental-driven liquidity traps, there is no straightforward recipe for mitigating the welfare costs...
Persistent link: https://www.econbiz.de/10012037377
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Counter-cyclical fiscal rules and the zero lower bound
Hauptmeier, Sebastian; Kamps, Christophe; Radke, Lucas - 2022
economic activity, inflation and government debt in face of an occasionally binding lower bound on the nominal interest rate in … policy, the optimal fiscal policy rule features a strong counter-cyclical response to the deviation of inflation from the … inflation significantly improves welfare and reduces the lower-bound frequency. In addition, the optimal simple monetary and …
Persistent link: https://www.econbiz.de/10013342236
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Mind the output gap : the disconnect of growth and inflation during recessions and convex Phillips curves in the euro area
Groß, Marco; Semmler, Willi - Task Force on Low Inflation (LIFT) - 2017
We develop a theoretical model that features a business cycle-dependent relation between out- put, price inflation and … inflation expectations, augmenting the model by Svensson (1997) with a nonlinear Phillips curve that reflects the rationale … underlying the capacity constraint theory (Macklem (1997)). The theoretical model motivates our empirical assessment for the euro …
Persistent link: https://www.econbiz.de/10011636803
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Attenuating the forward guidance puzzle : implications for optimal monetary policy
Nakata, Taisuke; Ogaki, Ryota; Schmidt, Sebastian; Yoo, Paul - 2019
We examine the implications of less powerful forward guidance for optimal policy using a sticky-price model with an effective lower bound (ELB) on nominal interest rates as well as a discounted Euler equation and Phillips curve. When the private-sector agents discount future economic conditions...
Persistent link: https://www.econbiz.de/10011959272
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Convex supply curves
Boehm, Christoph E.; Pandalai-Nayar, Nitya - 2020
We provide evidence that industries' supply curves are convex. To guide our empirical analysis, we develop a model, in which capacity constraints at the plant level generate convex supply curves at the industry level. The industry's capacity utilization rate is a sufficient statistic for the...
Persistent link: https://www.econbiz.de/10012271523
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Monetary policy, neutrality and the environment
Faria, João Ricardo; McAdam, Peter; Viscolani, Bruno - 2021
We study the interaction between monetary and fiscal policies in a Ramsey-Sidrauski model augmented with environmental capital. Equilibrium solutions are studied through the "Green Golden Rule". Despite the non-separability of money in utility and intertemporally nonseparable preferences, money...
Persistent link: https://www.econbiz.de/10012594070
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The impact of constrained monetary policy on the fiscal multipliers on output and inflation
Bletzinger, Tilman; Lalik, Magdalena - 2017
on output and, in particular, also on inflation in the euro area under alternative settings for monetary policy. We … that this over-proportionality is stronger for the fiscal multiplier on inflation than on output. We relate this finding to …
Persistent link: https://www.econbiz.de/10011637428
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The Phillips curve at the ECB
Eser, Fabian; Karadi, Peter; Lane, Philip R.; Moretti, Laura - 2020
We explain the role of the Phillips Curve in the analysis of the economic outlook and the formulation of monetary policy at the ECB. First, revisiting the structural Phillips Curve, we highlight the challenges in recovering structural parameters from reduced-form estimates and relate the...
Persistent link: https://www.econbiz.de/10012212851
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Robust monetary rules under unstructured and structured model uncertainty
Levine, Paul (contributor); Pearlman, Joseph (contributor) - 2008
This paper compares two contrasting approaches to robust monetary policy design. The first developed by Hansen and Sargent (2003, 2007) assumes unstructured model uncertainty and uses a minimax robustness criterion to design monetary rules. This contrasts with an older literature that structures...
Persistent link: https://www.econbiz.de/10003778827
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A toolkit for computing Constrained Optimal Policy Projections (COPPs)
De Groot, Oliver; Mazelis, Falk; Motto, Roberto; … - 2021
This paper presents a toolkit1 for generating optimal policy projections. It makes five contributions. First, the toolkit requires a minimal set of inputs: only a baseline projection for target and instrument variables and impulse responses of those variables to policy shocks. Second, it solves...
Persistent link: https://www.econbiz.de/10012519365