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inflation to rise in the short term. Our results also suggest that the effects on aggregate supply have grown stronger in recent …
Persistent link: https://www.econbiz.de/10013079910
The recent global financial crisis illustrates that financial frictions are a significant source of volatility in the economy. This paper investigates monetary policy stabilization in an environment where financial frictions are a relevant source of macroeconomic fluctuation. We derive a measure...
Persistent link: https://www.econbiz.de/10013049145
Empirical evidence demonstrates that credit standards, including lending margins and collateral requirements, move in a countercyclical direction. In this study, we construct a small open economy model with financial frictions to generate the countercyclical movement in credit standards. Our...
Persistent link: https://www.econbiz.de/10012800343
Theory suggests that endogenous borrowing constraints amplify the impact of external shocks on the economy. How big is the amplification? In this paper, we quantitatively investigate this question in the context of a dynamic, general equilibrium model with borrowing constraints under two...
Persistent link: https://www.econbiz.de/10014052739
, inflation and unemployment, we detect a wrong sign in the response of inflation to contractionary monetary policy shocks … 1999-2019, when the Federal Funds Rate and the Euro-Dollar exchange rate are added to the VAR model inflation shows … significant unemployment inflation trade-off emerges. These conclusions are confirmed by using industrial production instead of …
Persistent link: https://www.econbiz.de/10013168711
Empirical evidence suggests that considerable differentials in inflation rates exist across households. This paper … investigates how central banks should react to household inflation heterogeneity in a tractable New Keynesian model. We include two … households that differ in their consumer price inflation rates after adverse shocks. The central bank reacts to either an average …
Persistent link: https://www.econbiz.de/10012803661
In order to explain the joint fluctuations of output, inflation and the labor market, this paper first develops a … helps to explain the sluggishness of inflation and the persistence of output after a monetary policy shock. The ability of … the model to account for the joint dynamics of output and inflation rely on its ability to explain the dynamics in the …
Persistent link: https://www.econbiz.de/10009636527
Staggered prices are a fundamental building block of New Keynesian dynamic stochastic general equilibrium models. In the standard model, prices are uniformly staggered but recent empirical evidence suggest that deviations from uniform staggering are common, This paper analyzes how...
Persistent link: https://www.econbiz.de/10003912117
examine the relevance of the cost channel for inflation dynamics in G7 countries. Since firms' costs of working capital … inflation responses to monetary policy shocks, and can even lead to inverse inflation responses, when the cost channel is …
Persistent link: https://www.econbiz.de/10009524830
output and inflation, as observed in a vectorautoregression analysis. In contrast to backward indexation to past inflation …, which is often assumed in the literature, sticky information leads to a hump-shaped response in the inflation of flexibly …
Persistent link: https://www.econbiz.de/10011517128