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How and why do financial conditions matter for real outcomes? The ‘workhorse model of money and liquidity’ of Kiyotaki and Moore (2008) shows how--with full employment maintained by flexible prices--shifting credit constraints can affect investment and future aggregate supply. We show that,...
Persistent link: https://www.econbiz.de/10009275964
Shocks to bank lending, risk-taking and securitization activities that are orthogonal to real economy and monetary policy innovations account for more than 30 percent of U.S. output variation. The dynamic effects, however, depend on the type of shock. Expansionary securitization shocks lead to a...
Persistent link: https://www.econbiz.de/10011262887
This paper is based on presentation given at the June 2011 Conference of the Centre for Growth and Business Cycle Research at the University of Manchester. It reviews key features of the 2007-08 financial crisis, the subsequent 'great recession' and the European public debt problems; in the...
Persistent link: https://www.econbiz.de/10011083899
I estimate the dynamic effects of respectively traditional interest rate innovations and unconventional monetary policy actions on the Euro area economy. The results show that the Eurosystem can stimulate the economy beyond the policy rate by increasing the size of its balance sheet. The...
Persistent link: https://www.econbiz.de/10009003368
Giffen reported that, in the late nineteenth century, English wheat consumption rose when its price increased – the first recorded “Giffen good”. Using Giffen’s data, I explain how he reached his conclusion. I then show that his analysis was faulty: price elasticity of demand appears...
Persistent link: https://www.econbiz.de/10011084480
Bob Gregory contrasts ‘the presuppositions of Royal Parade’ of 1950 Melbourne with the present outlook of himself and Australia at large. He outlines the evolution of his methodological position from the University of Melbourne student to the Canberra policy advisor, and defends that...
Persistent link: https://www.econbiz.de/10008490577
We compile the list of articles published in major refereed economics journals during the last 35 years that have received more than 500 citations. We document major shifts in the mode of contribution and in the importance of different sub-fields: Theory loses out to empirical work, and micro...
Persistent link: https://www.econbiz.de/10005791355
This paper distinguishes between two kinds of Endogenous Business Cycle models, and discusses the evolution from first generation EBC1 models to second generation EBC2 models. I argue that EBC1 models, which display dynamic indeterminacy, are part of the evolution of modern macroeconomics that...
Persistent link: https://www.econbiz.de/10011084345
In this lecture we have traversed the history, theory and econometrics of business cycles with the aim of making some suggestions about what should appear in any guide book.
Persistent link: https://www.econbiz.de/10005032814
The paper considers ways of avoiding a liquidity trap and ways of getting out of one. Unless lower short nominal interest rates are associated with significantly lower interest volatility, a lower average rate of inflation, which will be associated with lower expected nominal interest rates,...
Persistent link: https://www.econbiz.de/10005136693