1,721,062 research outputs found
Is monetary policy in an open economy fundamentally different?
No full textAnalysis of principles of optimal monetary policy in a small open econom
Monetary Policy in a Low Pass-Through Environment
No full textLay out model with imperfect exchane rate pass-through due to nominal stickiness in the adjustment of import price
Into the Mussa Puzzle: Monetary Policy Regimes and the Real Exchange Rate in a Small Open Economy, Journal of International Economics , Vol. 62, Issue 1, Pages 1-243 (2004).
No full textCompares performance of fixed vs. variable exchange rate regime in a model of the New Open Macro literature
New Keynesian models, durable goods, and collateral constraints
No full textAnalysis of the transmission of monetary policy shocks in the presence of durable goods and borrowing constraints. Extends baseline New Keynesian model to include imperfections in credit markets. Finds that only model with borrowing constraints can reconcile with empirical evidence on the sectoral effects of monetary shocks
New international monetary arrangements and the exchange rate
No full textAnalyzes two country sticky price model, and compares coordination to alternative simple rules
Optimal monetary policy with collateralized household debt and borrowing constraints
No full textAnalyzes optimal monetary policy in a context with heterogenous agents and borrowing constraints
Comment on "Technology-hours redux: tax changes and the measurement of technology shocks"
No full textComment on article estimating the effects of tax shocks on alternative macroeconomic variable
The international dimension of inflation: evidence from disaggregated consumer price data
No full textWe estimate the contribution of international common factors to the dynamics of price inflation rates of a cross-section of 948 CPI products in four OECD countries: US, Germany, France, and UK. We find two main results. First, on average, and at least in the sample 1991-2004, one international common factor explains between 15 and 30 percent of the variance of consumer prices (depending on the transformation applied to the data). Given the high level of disaggregation of our panel, this estimate is best viewed as a lower bound for the contribution of international factors to inflation dynamics. Second, we find a strongly positive and statistically significant relationship between exposure of consumer inflation to international shocks and trade openness at the sectoral level. The latter result holds regardless of whether the original data are expressed in local as opposed to common currency
Deleverage and financial fragility
No full textSevere economic downturns, characterized by deleverage, are typically preceeded by phenomena of debt overhang. This evidence suggests that large recessions may not be the result of large shocks, but, rather, of the interaction between typical shocks and the current state of the economy. We study the transmission of deleverage shocks in a stochastic economy with heterogeneous agents and occasionally binding collateral constraints, where debt evolves endogenously. Our key finding is that the impact effect of a deleverage shock on aggregate output is a non-linear, S-shaped, function of the accumulated level of debt. At low levels of debt, deleverage is almost neutral, whereas its negative impact is largely magnified when debt reaches a critical threshold, i.e., when financial fragility is sufficiently high. At this threshold, the constraint on borrowing becomes endogenously binding. However, when the level of debt is already high before the shock hits, the borrowers are constrained both ex-ante and ex-post. In this case, the effect on output of a deleverage shock is the highest, but, at the margin, roughly insensitive to the level of debt. This non-linearity is much more pronounced for deleverage shocks than for productivity shocks. Our results cast doubts on the accuracy of gauging the effects of financial disturbances in linearized, certainty-equivalence environments
Bewley Banks
Full text linkHow do movements in the distributions of bank size and income affect the macroeconomy?To answer this question we develop a dynamic general equilibrium model with heteroge-neous financial intermediaries, incomplete markets, and aggregate uncertainty. We find that market incompleteness and uninsured idiosyncratic bank rate of return risk generate minimal concentration in the bank net worth distribution, leading to an “as-if” result, whereby the economy behaves as if it had a representative bank. However, introducing ex-ante hetero-geneity in the banks’ rates of return significantly raises concentration and amplifies real and financial fluctuations relative to the representative-bank case, as this increases a key suffi-cient statistic, the average marginal propensity to lend. We then extend the model with two empirically-validated features of the banking sector—countercyclical return risk and deposit market power—and show that these amplify and dampen aggregate fluctuations, respec-tively. Finally, because in the model with ex-ante heterogeneity the distribution of bank size is highly concentrated, shocks to the largest banks can account for almost all of the aggregate variation that is due to idiosyncratic risk, leading to granular banking and economic cycles. The failure of granular banks (“too big to fail”) produces sizeable macroeconomic crises
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