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The evidence suggests that monetary policy transmission is asymmetric over the business cycle. Interacting financing frictions with a preference for liquidity provides an explanation for this fact. Our mechanism generates monetary asymmetries in a model that jointly reproduces a set of asset...
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Based on findings in the behavioral economics literature, I incorporate non-unitary discounting into a monetary search … model to study optimal monetary policy. I apply non-unitary discounting, that is, discount rates that are different across …
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booms. This state dependence is essentially due to the time-variation in stochastic discounting that is needed to match the …
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