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Prudent Monetary Policy: Applications of Cautious LQG Control and Prediction

van der Ploeg, Frederick - C.E.P.R. Discussion Papers - 2004

less strongly to new measurements of the output gap. Prudence attenuates this policy reaction and biases the prediction of … modelling errors, since precaution reduces the power of its instruments by these variances. Also, prudence implies less weight … to new uncertain observations that are less important for welfare and introduces a bias in prediction. Prudent …

Persistent link: https://www.econbiz.de/10005114367

Keynesian Economics, Monetary Policy and the Business Cycle - New and Old

Cukierman, Alex - C.E.P.R. Discussion Papers - 2005

After a brief review of the main differences between New and Old Keynesian economics from the 1960s this paper focuses on a tension between traditional sluggish measures of potential output commonly used by policy-makers and the New Keynesian (NK) notion of this variable which conceptualizes it...

Persistent link: https://www.econbiz.de/10005504456

Is Numérairology the Future of Monetary Economics? Unbundling Numéraire and Medium of Exchange Through a Virtual Currency and a Shadow Exchange Rate

Buiter, Willem H. - C.E.P.R. Discussion Papers - 2007

The paper discusses some fundamental problems in monetary economics associated with the determination and role of the numéraire. The issues are introduced by formalising a proposal, attributed to Eisler, to remove the zero lower bound on nominal interest rates by unbundling the numéraire and...

Persistent link: https://www.econbiz.de/10005504750

The Simple Analytics of Helicopter Money:Why It Works – Always

Buiter, Willem H. - C.E.P.R. Discussion Papers - 2014

This paper aims to provide a rigorous analysis of Milton Friedman’s famous parable of the ‘helicopter’ drop of money. A helicopter drop of money is a permanent/irreversible increase in the nominal stock of fiat base money with a zero nominal interest rate, which respects the intertemporal...

Persistent link: https://www.econbiz.de/10011084422

The Limits to Fiscal Stimulus

Buiter, Willem H. - C.E.P.R. Discussion Papers - 2009

The paper considers the case for an internationally coordinated further fiscal stimulus during the second half of 2009. Although this makes some of the analysis period-specific, most of the issues and principles considered are timeless. For a fiscal stimulus to be both effective there must be...

Persistent link: https://www.econbiz.de/10008557012

Reversing unconventional monetary policy: technical and political considerations

Buiter, Willem H. - C.E.P.R. Discussion Papers - 2009

There are few if any technical problems involved in reversing the unconventional monetary policies - quantitative easing, credit easing and enhanced credit support - implemented by central banks around the world as short-term nominal interest rates became constrained by the zero lower bound. The...

Persistent link: https://www.econbiz.de/10008557018

Seigniorage

Buiter, Willem H. - C.E.P.R. Discussion Papers - 2007

Governments through the ages have appropriated real resources through the monopoly of the ‘coinage’. In modern fiat money economies, the monopoly of the issue of legal tender is generally assigned to an agency of the state, the Central Bank, which may have varying degrees of operational and...

Persistent link: https://www.econbiz.de/10005792048

Bailout Uncertainty in a Microfounded General Equilibrium Model of the Financial System

Cukierman, Alex; Izhakian, Yehuda - C.E.P.R. Discussion Papers - 2011

This paper develops a micro-founded general equilibrium model of the financial system composed of ultimate borrowers, ultimate lenders and financial intermediaries. The model is used to investigate the impact of uncertainty about the likelihood of governmental bailouts on leverage, interest...

Persistent link: https://www.econbiz.de/10009144737

Optimal Monetary and Fiscal Policy in an Economy with Endogenous Public Debt

Luk, Paul; Vines, David - C.E.P.R. Discussion Papers - 2015

This paper uses a New Keynesian framework to study the coordination of fiscal and monetary policies, in response to an inflation shock when the policymaker acts with commitment. We first show that, in the simplest New Keynesian model, fiscal policy plays no part in the optimal policy response,...

Persistent link: https://www.econbiz.de/10011276383

Optimal Monetary and Fiscal Policy in an Economy with Inflation Persistence

Luk, Paul; Vines, David - C.E.P.R. Discussion Papers - 2015

This paper studies a simple New-Keynesian model of fiscal and monetary policy coordination when the policymaker acts under commitment. With a New Keynesian Phillips curve it is optimal to control inflation only through the use of monetary policy. But, when price-setters use a Steinsson (2003)...

Persistent link: https://www.econbiz.de/10011276384