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Acharya, Sushant; Pesenti, Paolo A. - 2024

Keynesian model. Relative to Representative Agent (RANK) models, our framework introduces a precautionary-savings channel, as … households in both countries face uninsurable income risk, and a real-income channel, as households have heterogeneous marginal … propensities to consume (MPC). While both channels amplify the size of spillovers/spillbacks, only precautionary savings can change …

Persistent link: https://www.econbiz.de/10014501129

The optimal supply of central bank reserves under uncertainty

Afonso, Gara; La Spada, Gabriele; Mertens, Thomas; … - 2023 - Revised December 2023

This paper provides an analytically tractable theoretical framework to study the optimal supply of central bank reserves when the demand for reserves is uncertain and nonlinear. We fully characterize the optimal supply of central bank reserves and associated market equilibrium. We find that the...

Persistent link: https://www.econbiz.de/10014426250

The side effects of safe asset creation

Acharya, Sushant; Dogra, Keshav - 2018

interest rate environment. Higher risk increases the demand for safe assets, lowering the natural rate of interest below zero …

Persistent link: https://www.econbiz.de/10011806268

The Federal Reserve and market confidence

Boyarchenko, Nina; Haddad, Valentin; Plosser, Matthew C. - 2016

We discover a novel monetary policy shock that has a widespread impact on aggregate financial conditions. Our shock can be summarized by the response of long-horizon yields to Federal Open Market Committee (FOMC) announcements; not only is it orthogonal to changes in the near-term path of policy...

Persistent link: https://www.econbiz.de/10011446542

Monetary policy and the run risk of loan funds

Cetorelli, Nicola; La Spada, Gabriele; Santos, João A. C. - 2022

funds are significantly more susceptible to run risk than any other category of debt funds, including corporate bond funds …

Persistent link: https://www.econbiz.de/10013162106

The role of consumption substitutability in the international transmission of shocks

Tille, Cédric - 1999

Persistent link: https://www.econbiz.de/10001398156

Floor systems and the Friedman rule : the fiscal arithmetic of open market operations

Keister, Todd; Martin, Antoine; McAndrews, James Joseph - 2015

In a floor system of monetary policy implementation, the central bank remunerates bank reserves at or near the market rate of interest. Some observers have expressed concern that operating such a system will have adverse fiscal consequences for the public sector and may even require the...

Persistent link: https://www.econbiz.de/10011410519

The effect of monetary policy on bank wholesale funding

Choi, Dong Beom; Choi, Hyun-soo - 2016

monetary tightening could increase systemic risk. Our findings also suggest that introducing liquidity requirements can bolster …

Persistent link: https://www.econbiz.de/10011413238

Interbank market and central bank policy

Ahn, Jung-hyun; Bignon, Vincent; Breton, Régis; … - 2016

We develop a model in which financial intermediaries hold liquidity to protect themselves from shocks. Depending on parameter values, banks may choose to hold too much or too little liquidity on aggregate compared with the socially optimal amount. The model endogenously generates a situation of...

Persistent link: https://www.econbiz.de/10011419845

Liquidity traps, capital flows

Acharya, Sushant; Bengui, Julien - 2016

This paper explores the role of capital flows and exchange rate dynamics in shaping the global economy's adjustment in a liquidity trap. Using a multi-country model with nominal rigidities, we shed light on the global adjustment since the Great Recession, a period when many advanced economies...

Persistent link: https://www.econbiz.de/10011419850