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Existence, uniqueness and computation of solutions to dynamic models with occasionally binding constraints

Holden, Tom D. - 2016

We present the first necessary and sufficient conditions for the existence of a unique perfect-foresight solution, returning to a given steady-state, in an otherwise linear model with occasionally binding constraints. We derive further conditions on the existence of a solution in such models,...

Persistent link: https://www.econbiz.de/10011422742

Countercyclical versus Procyclical Taylor Principles

Chatelain, Jean-Bernard - 2016

Assuming inflation is a forward variable in Taylor (1999) model, this paper finds opposite policy rule recommandations … with counter-cyclical policy rule parameters (Taylor principle: inflation rule larger than one and bounded upwards) in the … case of optimal policy under commitment versus pro-cyclical policy rule parameters (inflation rule parameter below zero) in …

Persistent link: https://www.econbiz.de/10011444004

Computation of solutions to dynamic models with occasionally binding constraints

Holden, Tom D. - 2016

We construct the first algorithm for the perfect foresight solution of otherwise linear models with occasionally binding constraints, with fixed terminal conditions, that is guaranteed to return a solution in finite time, if one exists. We also provide a proof of the inescapability of the...

Persistent link: https://www.econbiz.de/10011514628

Government Solvency, Austerity and Fiscal Consolidation in the OECD: A Keynesian Appraisal of Transversality and No Ponzi Game Conditions

Azizi, Karim; Canry, Nicolas; Chatelain, Jean-Bernard; … - 2013

This paper investigates the relevance of the No-Ponzi game condition for public debt (i.e. the public debt growth rate has to be lower than the real interest rate, a necessary assumption for Ricardian equivalence) and of the transversality condition for the GDP growth rate (i.e. the GDP growth...

Persistent link: https://www.econbiz.de/10010311966

Macroprudential Regulation and the Role of Monetary Policy

Tayler, William; Zilberman, Roy - 2014

response to inflation in the central bank policy rule yield the lowest welfare losses. The findings emphasize the importance of …

Persistent link: https://www.econbiz.de/10010335198

Credit crunches from occasionally binding bank borrowing constraints

Holden, Tom D.; Levine, Paul; Swarbrick, Jonathan M. - 2017

We present a model in which banks and other financial intermediaries face both occasionally binding borrowing constraints, and costs of equity issuance. Near the steady state, these intermediaries can raise equity finance at no cost through retained earnings. However, even moderately large...

Persistent link: https://www.econbiz.de/10011719158

The role of energy in a real-business-cycle model with an endogenous capital utilization rate and a government sector: the case of Bulgaria (1999-2016)

Vasilev, Aleksandar - 2018

We introduce a pro-cyclical endogenous utilization rate of physical capital stock into a real-business-cycle model augmented with a detailed government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2016). We...

Persistent link: https://www.econbiz.de/10011786877

A business-cycle-model with monopolistically-competitive intermediary firms and sticky nominal wages: the case of Bulgaria after the introduction of the currency board (1999-2016)

Vasilev, Aleksandar - 2018

We augment an otherwise standard business cycle model with a richer government sector, and add monopolistic competition in the product market, and rigid prices, as well as rigid wages a la Calvo (1983) in the labor market. This specification with the nominal wage rigidity, when calibrated to...

Persistent link: https://www.econbiz.de/10011796105

Comparing Central Europe and the Baltic macro-economies: A Bayesian approach

Beqiraj, Elton; Di Bartolomeo, Giovanni; Di Pietro, Marco; … - 2018

Applying the Bayesian approach, a small open economy DSGE model was estimated using a sample of quarterly data for a macro-region formed by six Central Europe and Baltic economies: Czech Republic, Estonia, Hungary, Lithuania, Poland, and Slovakia. Estimates have been employed to investigate the...

Persistent link: https://www.econbiz.de/10011796609

A Real-Business-Cycle model with pollution and environmental taxation: the case of Bulgaria

Vasilev, Aleksandar - 2018

We introduce an environmental dimension into a real-business-cycle model augmented with a detailed government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2016). We investigate the quantitative importance of...

Persistent link: https://www.econbiz.de/10011803438