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Monetary policy, trends in real interest rates and depressed demand

Beaudry, Paul; Meh, Césaire Assah - 2021 - Last updated: August 16, 2021

long run. In particular, we show that if monetary policy reacts aggressively to inflation, this supports a steady state … where inflation is close to the central bank's target. However, the same aggressive policy simultaneously favours the … inflation are lower and monetary policy is constrained by the effective lower bound. We discuss how fiscal policy can be used to …

Persistent link: https://www.econbiz.de/10012546126

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

Revisiting the Interest Rate-Exchange Rate Nexus: A Markov Switching Approach

Chen, Shiu-Sheng - EconWPA - 2003

In this paper the interest rate-exchange rate nexus and the effectiveness of interest rate defence are investigated theoretically and empirically. We construct a simple theoretical model by incorporating Taylor rule in the model proposed by Jeanne and Rose (2002). Mixing the macroeconomic theory...

Persistent link: https://www.econbiz.de/10005062695

Interest-rate Defenses of Currency Pegs

Sole, Juan - Society for Economic Dynamics - SED - 2004

This paper studies a policy often used to defend a currency peg: raising short-term interest rates. The rationale for this policy is to stem demand for foreign reserves. Yet, this mechanism is absent from most monetary models. This paper develops a general equilibrium model with asset market...

Persistent link: https://www.econbiz.de/10005069569

How changes in oil prices affect the macroeconomy

DePratto, Brian; De Resende, Carlos; Maier, Philipp - 2009

We estimate a New Keynesian general-equilibrium open economy model to examine how changes in oil prices affect the macroeconomy. Our model allows oil price changes to be transmitted through temporary demand and supply channels (affecting the output gap), as well as through persistent supply side...

Persistent link: https://www.econbiz.de/10010279904