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Bonds transaction services and the term structure of interest rates : implications for equilibrium determinacy
Marzo, Massimiliano; Zagaglia, Paolo - 2012 - This version: March 23, 2012
determinacy of rational expectations equilibria. We use a strongly-separable utility function to model short-term bonds providing … model. In this way, we study equilibrium determinacy properties within a context embedding the full information derived from … of monetary policy rule. Achieving solution determinacy requires to constraint policy coefficients to lie within bounds …
Persistent link: https://www.econbiz.de/10011731614
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Optimal deficit-spending in a liquidity trap with long-term government debt
De Beauffort, Charles - 2022
When the government issues long-term bonds, the optimal time-consistent fiscal and monetary policy is to consolidate debt in a liquidity trap by increasing taxes and by taming public spending. This prescription is at odds with large deficit-spending undertaken in the US during previous liquidity...
Persistent link: https://www.econbiz.de/10013278929
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Ambiguity, nominal bond yields and real bond yields
Zhao, Guihai - 2018
Equilibrium bond-pricing models rely on inflation being bad news for future growth to generate upward-sloping nominal yield curves. We develop a model that can generate upward-sloping nominal and real yield curves by instead using ambiguity about inflation and growth. Ambiguity can help resolve...
Persistent link: https://www.econbiz.de/10011864574
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Designing QE in a fiscally sound monetary union
Bletzinger, Tilman; Thadden, Leopold von - 2018
This paper develops a tractable model of a monetary union with a sound fiscal governance structure and shows how in such environment the design of monetary policy above and at the lower bound constraint on short-term interest rates can be linked to well-known findings from the literature dealing...
Persistent link: https://www.econbiz.de/10011856536
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The Fiscal Theory of the Price Level in a World of Low Interest Rates
Bassetto, Marco - 2017
A central equation for the fiscal theory of the price level (FTPL) is the government budget constraint (or "government …
Persistent link: https://www.econbiz.de/10012942155
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Designing QE in a Fiscally Sound Monetary Union
Bletzinger, Tilman - 2018
This paper develops a tractable model of a monetary union with a sound fiscal governance structure and shows how in such environment the design of monetary policy above and at the lower bound constraint on short-term interest rates can be linked to well-known findings from the literature dealing...
Persistent link: https://www.econbiz.de/10012917169
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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
Over the last few decades, real interest rates have trended downward in many countries. The most common explanation is that this reflects depressed demand due to demographic, technological and other real factors such as income inequality. In this paper we explore the claim that these trends may...
Persistent link: https://www.econbiz.de/10012546126
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Discount rates, debt maturity and the fiscal theory
Corhay, Alexandre; Kind, Thilo; Kung, Howard; Morales, … - 2021 - Last updated: November 26, 2021
stance of monetary/fiscal policy. Accounting for risk premia in the fiscal theory allows the government portfolio to affect … fiscal theory directly depend on the conditional nominal term premium, giving rise to an optimal debt maturity policy that is …
Persistent link: https://www.econbiz.de/10012670322
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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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The impact of constrained monetary policy on the fiscal multipliers on output and inflation
Bletzinger, Tilman; Lalik, Magdalena - 2017
This paper uses two established DSGE models (QUEST III and Smets-Wouters) to assess the impact of fiscal spending cuts on output and, in particular, also on inflation in the euro area under alternative settings for monetary policy. We compare four different settings of constrained monetary...
Persistent link: https://www.econbiz.de/10011637428