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Credit frictions and optimal monetary policy

Cúrdia, Vasco; Woodford, Michael - 2008

We extend the basic (representative-household) New Keynesian [NK] model of the monetary transmission mechanism to allow for a spread between the interest rate available to savers and borrowers, that can vary for either exogenous or endogenous reasons. We find that the mere existence of a...

Persistent link: https://www.econbiz.de/10011506667

Central bank misperceptions and the role of money in interest rate rules

Beck, Guenter; Wieland, Volker - 2008

Research with Keynesian-style models has emphasized the importance of the output gap for policies aimed at controlling inflation while declaring monetary aggregates largely irrelevant. Critics, however, have argued that these models need to be modified to account for observed money growth and...

Persistent link: https://www.econbiz.de/10011506668

Financial (in)stability, supervision and liquidity injections: a dynamic general equilibrium approach

de Walque, Gregory; Pierrard, Olivier; Rouabah, Abdelaziz - 2008

This paper develops a dynamic stochastic general equilibrium model with interactions between an heterogeneous banking sector and other private agents. We introduce endogenous default probabilities for both firms and banks, and allow for bank regulation and liquidity injection into the...

Persistent link: https://www.econbiz.de/10011506669

Risk premiums and macroeconomic dynamics in a heterogeneous agent model

De Graeve, Ferre; Dossche, Maarten; Emiris, Marina; … - 2008

We analyze financial risk premiums and real economic dynamics in a DSGE model with three types of agents - shareholders, bondholders and workers - that differ in participation in the capital market and in terms of risk aversion. Aggregate productivity and distribution risk are shared among these...

Persistent link: https://www.econbiz.de/10011506671

Forecast with judgment and models

Monti, Francesca - 2008

This paper proposes a simple and model-consistent method for combining forecasts generated by structural micro-founded models and judgmental forecasts. The method also enables the judgmental forecasts to be interpreted through the lens of the model. We illustrate the proposed methodology with a...

Persistent link: https://www.econbiz.de/10011506673

Sequential bargaining in a New Keynesian model with frictional unemployment and staggered wage negotiation

de Walque, Gregory; Pierrard, Olivier; Sneessens, Henri; … - 2009

We consider a model with frictional unemployment and staggered wage bargaining where hours worked are negotiated for … each period. The workers' bargaining power in the working time negotiations affects both unemployment volatility and … helps reduce the new entrants' wage rigidity required to match observed unemployment volatility. …

Persistent link: https://www.econbiz.de/10011506677

The young Lamfalussy: an empirical and policy-oriented growth theorist

Maes, Ivo - 2009

career as an academic, focusing on growth theory and Belgian and European growth patterns in the post-war period. His work is … eclectic approach towards economics, blending economic theory and empirical data beautifully to elucidate crucial policy …

Persistent link: https://www.econbiz.de/10011506683

Understanding inflation dynamics: Where do we stand?

Dossche, Maarten - 2009

I summarize recent progress made in the literature on inflation dynamics. This has been a very productive area of research due to the development of the so-called New Keynesian model and the availability of new macroeconomic and microeconomic evidence. Nevertheless, a number of problems still...

Persistent link: https://www.econbiz.de/10011506685

Input-output connections between sectors and optimal monetary policy

Kara, Engin - 2009

This paper considers the monetary policy implications of a model that features input-output connections between stages of production, so that a distinction between CPI inflation and PPI inflation arises. More specifically, this paper addresses the policy conclusion by K. Huang and Z. Liu [2005,...

Persistent link: https://www.econbiz.de/10011506686

Back to the basics in banking? A micro-analysis of banking system stability

De Jonghe, Olivier - 2009

This paper analyzes the relationship between banks’ divergent strategies toward specialization and diversification of financial activities and their ability to withstand a banking sector crash. We first generate market-based measures of banks’ systemic risk exposures using extreme value...

Persistent link: https://www.econbiz.de/10011506687