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Firm inattention and the efficacy of monetary policy : a text-based approach

Song, Wenting; Stern, Samuel - 2022 - Last updated: January 11, 2022

This paper provides direct evidence of the importance of firm attention to macro-economic dynamics. We construct a text-based measure of firm attention to macro-economic news and document firm attention that is polarized and countercyclical. Differences in attention lead to asymmetric responses...

Persistent link: https://www.econbiz.de/10012797080

Frictional Asset Reallocation under Adverse Selection

Madison, Florian - 2018

The aim of this paper is to study asset reallocation in financial markets subject to search, bargaining, and information frictions, and to analyze the impact of monetary policy on equilibrium outcomes. The main results show that private information regarding the quality of an asset impairs its...

Persistent link: https://www.econbiz.de/10012932737

Monetary Misperceptions : Optimal Monetary Policy Under Incomplete Information

Halperin, Basil - 2018

Inflation targeting is strictly suboptimal when economic actors have incomplete information about the state of the economy. Nominal income targeting is approximately optimal, and exactly optimal under certain parameterizations. We derive this result in a “Lucas islands” monetary...

Persistent link: https://www.econbiz.de/10012933106

Monetary policy under subjective beliefs of banks: optimal central bank collateral requirements

Böser, Florian - 2021 - This version: June 29, 2021

We study how the subjective beliefs about loan repayment on the side of liquidity-constrained banks affect the central bank's choice of collateral standards in its lending facilities. Optimism on the side of banks, entailing a higher collateral value of bank loans, can lead to excessive lending...

Persistent link: https://www.econbiz.de/10012585474

Monetary Policy under Data Uncertainty : Interest-Rate Smoothing from a Cross-Country Perspective

Lee, Saiah - 2021

Cross-country estimates of Taylor rules suggest that higher data uncertainty is associated with a more inertial behavior of interest rates. Data uncertainty is measured by the volatility of differences between real-time data and their revisions. Using a simple structural model with Kalman filter...

Persistent link: https://www.econbiz.de/10013242211

Learning About Monetary Policy Rules When Long-Horizon Expectations Matter

Preston, Bruce J. - 2015

policy rules: the assumed manner of expectations formation. Following a considerable literature on learning, it is assumed … learning dynamics converge to the equilibrium predicted by rational expectations equilibrium analysis. This question is … Taylor rule ensures convergence to rational expectations equilibrium, if the so-called Taylor principle is satisfied, under …

Persistent link: https://www.econbiz.de/10013032843

Q-Monetary Transmission

Jeenas, Priit; Lagos, Ricardo - National Bureau of Economic Research - 2022

We study the effects of monetary-policy-induced changes in Tobin's q on corporate investment and capital structure. We develop a theory of the mechanism, provide empirical evidence, evaluate the ability of the quantitative theory to match the evidence, and quantify the relevance for monetary...

Persistent link: https://www.econbiz.de/10013210051

State-Dependent Central Bank Communication with Heterogeneous Beliefs

Herbert, Sylverie - 2021

' expectations by providing public information. I introduce heterogeneous priors in an otherwise standard Bayesian persuasion model a …

Persistent link: https://www.econbiz.de/10013212539

Limited Higher Order Beliefs and the Welfare Effects of Public Information

Cornand, Camille - 2013

In games with strategic complementarities, public information about the state of the world has a larger impact on equilibrium actions than private information of the same precision, because the former is more informative about the likely behavior of others. This may lead to welfare-reducing...

Persistent link: https://www.econbiz.de/10013076981

Signaling Effects of Monetary Policy

Melosi, Leonardo - 2013

Forecasters as a measure of price setters' inflation expectations. We find that the model fits the data better than a prototypical … inflation expectations in the 1970s. The estimated model with signaling effects delivers large and persistent real effects of … demand shocks. The signaling effects of monetary policy have contributed (i ) to heightening inflation expectations in the …

Persistent link: https://www.econbiz.de/10013080066