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Persistent link: https://www.econbiz.de/10011343414
Motivated by VAR evidence on the risk-taking channel in the US, we develop a New Keynesian model where low levels of the risk-free rate induce banks to grant credit to riskier borrowers. In the model an agency problem between depositors and equity holders incentivizes banks to take excessive...
Persistent link: https://www.econbiz.de/10011586150
This paper investigates the relationship between stock market fluctuations and monetary policy in a DSGE model for the US economy. We initially adopt a framework in which fluctuations in households' financial wealth are allowed – but not required – to influence current consumption. This is...
Persistent link: https://www.econbiz.de/10013143813
This paper uses the Bayesian approach to solve and estimate a New Keynesian model augmented by a generalized Phillips curve, in which the shape of the price reset hazards can be identified using aggregate data. My empirical result shows that a constant hazard function is easily rejected by the...
Persistent link: https://www.econbiz.de/10003905589
Fiscal policy has become quite controversial in the post-Keynesian era, the debate over the Obama stimulus package being a contentious recent example. Some pundits go so far as to take the position that macroeconomic theory has failed to meaningfully progress in terms of providing useful...
Persistent link: https://www.econbiz.de/10008653412
Persistent link: https://www.econbiz.de/10003862865
In this paper, I use firm-level data from Compustat to document the evolution of markups among listed U.S. non-financial firms during the height of the COVID-19 pandemic (2020-2022). I show that, continuing its long-term rise, the aggregate (sales-weighted) markup rises markedly in 2020 and...
Persistent link: https://www.econbiz.de/10015057213
In the debate on monetary policy strategies on both sides of the Atlantic, it is now almost a commonplace to contrast the Fed and the ECB by pointing out the former's flexibility and capacity to adjust rigidity, and the latter's extreme caution, and obsession with low inflation. In looking at...
Persistent link: https://www.econbiz.de/10003229843
We calibrate a standard New Keynesian model with three alternative representations of monetary policy- an optimal timeless rule, a Taylor rule and another with interest rate smoothing- with the aim of testing which if any can match the data according to the method of indirect inference. We find...
Persistent link: https://www.econbiz.de/10003882196
This paper uses Hyman P. Minsky’s approach to analyze the current international financial crisis, which was initiated by problems in the American real estate market. In a 1987 manuscript, Minsky had already recognized the importance of the trend toward securitization of home mortgages. This...
Persistent link: https://www.econbiz.de/10003727248