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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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The power of helicopter money revisited : a new Keynesian perspective
Carter, Thomas J.; Mendes, Rhys R. - 2020
We analyze money financing of fiscal transfers (helicopter money) in two simple New Keynesian models: a "textbook" model in which all money is non-interest-bearing (e.g., all money is currency), and a more realistic model with interest-bearing reserves. In the textbook model with only...
Persistent link: https://www.econbiz.de/10012159954
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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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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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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/10011540769
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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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Credibility, flexibility and renewal : the evolution of inflation targeting in Canada
Carter, Thomas J.; Mendes, Rhys R.; Schembri, Lawrence - 2018
In 1991, Canada became the second country to adopt an inflation target as a central pillar of its monetary policy framework. The regime has proven much more successful than initially expected, both in achieving price stability and in stabilizing the real economy against a wide range of shocks....
Persistent link: https://www.econbiz.de/10011952083
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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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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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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