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Policy uncertainty, lender of last resort and the real economy

Jasova, Martina; Mendicino, Caterina; Supera, Dominik - 2021

We show that a reduction in lender of last resort (LOLR) policy uncertainty posi-tively affects bank lending and propagates to investment and employment. We exploita unique policy that reduced uncertainty regarding the availability of future LOLRfunding for banks as a quasi-natural experiment....

Persistent link: https://www.econbiz.de/10012426306

Fiscal Policy in a Monetary Union in the Presence of Uncertainty about the Central Bank Preferences

Dai, Meixing - 2009

In this paper, we examine the link between political transparency of a common central bank (CCB) and decentralized supply-side fiscal policies in a monetary union. We find that the opacity of a conservative CCB has a restrictive effect on national fiscal policies since each government...

Persistent link: https://www.econbiz.de/10012765687

From SMP to PEPP : A Further Look at the Risk Endogeneity of the Central Bank

Fruzzetti, Marco; Gariano, Giulio; Palazzo, Gerardo; … - 2022

This paper examines the evolution of credit risk arising from monetary policy operations and ELA on the Eurosystem … balance sheet over the last decade. We employ a dynamic, market-driven risk model relying on the expected default frequencies … multivariate Student t distribution with time-varying parameters. We find that at the end of 2020, risk is slightly above its …

Persistent link: https://www.econbiz.de/10013292599

Non-Standard Central Bank Loss Functions, Skewed Risks, and Certainty Equivalence

Al-Nowaihi, Ali; Stracca, Livio - 2021

This paper sets out to investigate the role of additive uncertainty under plausible non-standard central bank loss functions over future inflation. Building on a substantial body of evidence in the economic psychology literature, this paper postulates (i) period-by-period loss functions that are...

Persistent link: https://www.econbiz.de/10013320249

Risk and state-dependent financial frictions

Harding, Martín; Wouters, Rafael - 2022 - Last updated: August 9, 2022

framework where financial frictions endogenously fluctuate between moderate (low risk) and severe (high risk), depending on the …

Persistent link: https://www.econbiz.de/10013335014

Monetary Policy and Central Bank Behaviour

Gartner, Manfred - 2003

This paper surveys the state of the art on monetary policy and central bank behaviour from a public choice perspective. After a brief look at the roots of today's view of monetary policy conduct and institutional design in early work on political business cycles, the inflation-stabilisation...

Persistent link: https://www.econbiz.de/10014104034

To Fed Watch or Not to Fed Watch : Equilibrium Analysis of Bank System Dynamics

Brock, William A. - 2017

We build a model economy in which Fed watching occurs. There is a huge number of blogs, financial letters, and news reporting that talks about what the Federal Reserve is likely to do. We model this behavior by allowing for banks to Fed watch, meaning that the bank will apply a costly...

Persistent link: https://www.econbiz.de/10012950716

Populism, Economic Policies, Political Pressure and Central Bank (In)dependence

Masciandaro, Donato - 2019

This article discusses the relationships between populism, economic policy design and central bank independence (CBI). Assuming that 1) a macro (banking) shock can occur, 2) the incumbent government can face a trade-off between bail-out and bail-in and can finance its public spending choosing...

Persistent link: https://www.econbiz.de/10012888906

Mr. Taylor and the Central Bank : Two Inference Exercises

Luna, Francesco - 2019

theory to model these inference exercises and to assess their general possibility of success. So, is it possible to infer …

Persistent link: https://www.econbiz.de/10012889157

Optimal Price Indices for Targeting Inflation Under Incomplete Markets

Anand, Rahul - 2010

In models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating the flexible price equilibrium. In this paper, we develop a two-sector two-good closed economy new Keynesian model to study the optimal choice of price index in markets with...

Persistent link: https://www.econbiz.de/10013139035