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Endogenous Monetary Policy Regime Change

Davig, Troy; Leeper, Eric M. - 2013

This paper makes changes in monetary policy rules (or regimes) endogenous. Changes are triggered when certain endogenous variables cross specified thresholds. Rational expectations equilibria are examined in three models of threshold switching to illustrate that (i) expectations formation...

Persistent link: https://www.econbiz.de/10014055631

Generalizing the Taylor Principle

Davig, Troy - 2006

raising their interest rate instrument more than one-for-one in response to higher inflation - to an environment in which …

Persistent link: https://www.econbiz.de/10012732859

Monetary and Fiscal Policy Switching

Davig, Troy; Leeper, Eric M.; Chung, Hess - 2013

A growing body of evidence finds that policy reaction functions vary substantially over different periods in the United States. This paper explores how moving to an environment in which monetary and fiscal regimes evolve according to a Markov process can change the impacts of policy shocks. In...

Persistent link: https://www.econbiz.de/10014069880

Monetary-Fiscal Policy Interactions and Fiscal Stimulus

Davig, Troy - 2013

Increases in government spending trigger substitution effects - both inter- and intra-temporal - and a wealth effect. The ultimate impacts on the economy hinge on current and expected monetary and fiscal policy behavior. Studies that impose active monetary policy and passive fiscal policy...

Persistent link: https://www.econbiz.de/10013095479

Reply to Generalizing the Taylor Principle : A Comment

Davig, Troy - 2013

Farmer, Waggoner, and Zha (2009) show that a new Keynesian model with a regime-switching monetary policy rule can support multiple solutions that depend only on the fundamental shocks in the model. Their note appears to find solutions in regions of the parameter space where there should be no...

Persistent link: https://www.econbiz.de/10013095861

Strategic interactions in U.S. monetary and fiscal policies

Chen, Xiaoshan; Leeper, Eric M.; Leith, Campbell B. - In: Quantitative economics : QE ; journal of the … 13 (2022) 2, pp. 593-628

stabilize debt until the mid 1990s; (4) The high inflation of the 1970s could have been effectively mitigated by either a switch … norm to eventually stabilize debt, current high debt levels produce only modest inflation; if confidence in those norms … erodes, high debt may deliver substantially more inflation. …

Persistent link: https://www.econbiz.de/10013382042