Selected course of the Kiel Institute Advanced Studies Program "Monetary Policy: Theory and Practice"
New Challenges for Monetary and Fiscal Policy Posed by Financial Frictions - Lawrence J. Christiano (Northwestern University) This course will address various new challenges for fiscal and monetary policy. Most of these reflect the increased recognition of the economic importance of financial frictions. We first consider financial frictions in the intermediation system and organize the discussion around frictions on the liability and asset sides of financial firm balance sheets. This will allow us to consider various problems in monetary policy: how monetary policy should respond to changes in interest rate spreads, what the effect of various types of unconventional monetary policy are, as well as macro prudential policy. We will then address the implications for monetary and fiscal policy of the lower bound on the nominal interest rate. Necessarily, we will have to confront some technical issues about how to solve dynamic models with inequality constraints. The economic issues we will examine include: the economic risks implied by the lower bound, forward guidance in monetary policy, and the impact of increasing government purchases when the lower bound is and is not binding.
|Event dates:||2015-12-07 – 2015-12-11|
|Organizer:||Kiel Institute for the World Economy IfW, Germany|
|Conference venue:||Kiel, IfW|
|Classification:||E5 - Monetary Policy, Central Banking and the Supply of Money and Credit ; H3 - Fiscal Policies and Behavior of Economic Agents|
|Event type:||Seminare, Summer Schools, Symposien, Workshops; Seminars, Summer Schools, Symposiums, Workshops|