Showing 61 - 70 of 162
This paper examines how money demand induced real balance effects contribute to the determination of the price level, as suggested by Patinkin (1949,1965), and if they affect conditions for local equilibrium uniqueness and stability. There exists a unique price level sequence that is consistent...
Persistent link: https://www.econbiz.de/10005661907
This paper investigates whether assuming that households possess advance information on their income shocks helps to overcome the difficulty of standard models to understand consumption insurance in the US. As our main result, we find that the quantitative relevance of advance information...
Persistent link: https://www.econbiz.de/10012214065
What is the role of contracting schemes for the welfare costs of nominal rigidities over the business cycle? We examine 4 different modeling schemes of nominal rigidities that all have the same average duration of contracts. We find that Calvo (1983) wage and price contracts may deliver welfare...
Persistent link: https://www.econbiz.de/10010295767
The financial crisis has prompted macroeconomists to think of new policy instruments that could help ensure financial stability. Policymakers are interested in understanding how these should be set in conjunction with monetary policy. We contribute to this debate by analyzing how monetary and...
Persistent link: https://www.econbiz.de/10010333642
At the zero lower bound (ZLB), expectations about the future path of monetary or fiscal policy are crucial. We model expectations formation under level-k thinking, a form of bounded rationality introduced by García-Schmidt and Woodford (2019) and Farhi and Werning (2017), consistent with...
Persistent link: https://www.econbiz.de/10012101557
The benefit from using second-order approximations tostochastic dynamic rational expec- tations models is explained. By example of the neoclassical growth model, this note as- sesses the accuracy of the obtained approximation. The implications for optimal policy are discussed.
Persistent link: https://www.econbiz.de/10010263093
This paper asks the following two questions: First, can a model with nominal rigidities in wage and price setting account for the average welfare costs of business cycle fluctuations identified in Gali, Gertler, and Lopez- Salido (2003)? Second, do we need to agree on a particular scheme for...
Persistent link: https://www.econbiz.de/10010263114
Persistent link: https://www.econbiz.de/10008664518
Persistent link: https://www.econbiz.de/10003676394
Persistent link: https://www.econbiz.de/10003924241