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Monetary policy and asset price overshooting: a rationale for the Wall/Main Street disconnect

Caballero, Ricardo J.; Simsek, Alp - 2022

We analyze optimal monetary policy and its implications for asset prices, when aggregate demand has inertia and responds to asset prices with a lag. If there is a negative output gap, the central bank optimally overshoots aggregate asset prices (asset prices are initially pushed above their...

Persistent link: https://www.econbiz.de/10013093040

Bank credit, expected inflation rate, and financial dynamics

Watanabe, Toshio - 2025

We investigate the effects of debt-capital ratio and expected inflation rate on the stability of the economy using a … Minsky model and reconsidering Fisher's debt-deflation theory. We have developed static and dynamic models that formalize an … inflation-targeting policy. The static model reveals that an increase in the debt-capital ratio may negatively impact the profit …

Persistent link: https://www.econbiz.de/10015371903

Stabilizing an unstable economy : on the choice of proper policy measures

Asada, Tōichirō; Chiarella, Carl; Flaschel, Peter; … - 2009

Currently, many monetary and fiscal policy measures are aimed at preventing the financial market meltdown that started in the US subprime sector and has spread worldwide as a great recession. Although some slow recovery appears to be on the horizon, it is worthwhile exploring the fragility and...

Persistent link: https://www.econbiz.de/10003905077

Stabilizing an unstable economy : on the choice of proper policy measures

Asada, Tōichirō; Chiarella, Carl; Flaschel, Peter; … - 2010

In the last months, the world's economies were confronted with the largest economic recession since the Great Depression. The occurrence of a worldwide financial market meltdown as a consequence originally stemming from of the crisis in the US subprime housing sector was only prevented by...

Persistent link: https://www.econbiz.de/10003985522

Risk-Taking, Capital Allocation and Optimal Monetary Policy

David, Joel Michael; Zeke, David - 2021

We study the role of firm heterogeneity in affecting business cycle dynamics and optimal stabilization policy. Firms differ in their degree of cyclicality, and hence, exposure to aggregate risk, leading to firm-specific risk premia that influence resource allocations. The heterogeneous firm...

Persistent link: https://www.econbiz.de/10013251194

Risk-Taking, Capital Allocation and Optimal Monetary Policy

Zeke, David - 2021

Persistent link: https://www.econbiz.de/10014031130

The portfolio theory of inflation and policy (in)effectiveness revisited : corroborating evidence

Bossone, Biagio; Cuccia, Andrea - 2020

This study revisits and tests empirically the Portfolio Theory of Inflation (PTI), which analyzes how the effectiveness … (Bossone, The portfolio theory of inflation and policy (in)effectiveness, 2019). The PTI shows that when an economy is heavily … and policies aimed to stimulate output growth dissipate into domestic currency depreciation and higher inflation, with …

Persistent link: https://www.econbiz.de/10012140238

Inflation Expectations of Households and Portfolio Rebalancing : Evidence from Inflation Targeting in India

Agarwal, Sumit; Chua, Yeow Hwee; Ghosh, Pulak; Song, … - 2022

This paper exploits a natural experiment in India – Inflation Targeting to study how changes in inflation expectations … influence households’ consumption, savings, and investments in risky assets. Using regional heterogeneity in inflation … expectations by city and city-age-gender bins due to the Inflation Targeting policy, we provide evidence of portfolio rebalancing …

Persistent link: https://www.econbiz.de/10013293613

The portfolio theory of inflation (and policy effectiveness)

Bossone, Biagio - 2019

The Portfolio Theory of Inflation (PIT) proposed in this study investigates the role of global financial markets in … inflation to rise due to a large exchange rate pass-through, with limited or no impact on output. On the other hand, high … dissipated and higher inflation reflects such dissipation. …

Persistent link: https://www.econbiz.de/10011993031

The portfolio theory of inflation and policy (in)effectiveness

Bossone, Biagio - 2019

taken by domestic agents. The Portfolio Theory of Inflation (PTI) developed in this study assumes that some critical … higher inflation, with limited or no impact on output. On the other hand, high credibility creates space for effective and …

Persistent link: https://www.econbiz.de/10012012446