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Boyarchenko, Nina - 2019

We study how the risks to future liquidity flow across corporate bond, Treasury, and stock markets. We document … distribution “flight-to-safety” effects: a deterioration in the liquidity of high-yield corporate bonds forecasts an increase in … the average liquidity of Treasury securities and a decrease in uncertainty about the liquidity of investment …

Persistent link: https://www.econbiz.de/10012897700

Interest, Reserves, and Prices

Benigno, Gianluca; Benigno, Pierpaolo - 2021

-Wicksellian paradigm. A general form of an aggregate-demand equation reveals a role for liquidity, as well as less effective movements in …

Persistent link: https://www.econbiz.de/10013222541

Learning the Fiscal Theory of the Price Level : Some Consequences of Debt Management Policy

Eusepi, Stefano - 2011

This paper examines how the scale and composition of public debt can affect economies that implement a combination of “passive” monetary policy and “active” fiscal policy. This policy configuration is argued to be of both historical and contemporary interest in the cases of the U.S. and...

Persistent link: https://www.econbiz.de/10013120094

Fiscal Foundations of Inflation : Imperfect Knowledge

Eusepi, Stefano - 2013

This paper proposes a theory of the fiscal foundations of inflation based on imperfect knowledge and learning. The theory is similar in spirit to, but distinct from, unpleasant monetarist arithmetic and the fiscal theory of the price level. Because the assumption of imperfect knowledge breaks...

Persistent link: https://www.econbiz.de/10013074021

The Role of Consumption Substitutability in the International Transmission of Shocks

Tille, Cédric - 2006

This paper develops a general framework to analyze the welfare consequences of monetary and fiscal shocks in an open economy, focusing on the role of the degree of substitutability between goods produced in different countries. We find that an expansionary shock that would be beneficial in a...

Persistent link: https://www.econbiz.de/10012735734

Stabilizing Expectations under Monetary and Fiscal Policy Coordination

Eusepi, Stefano; Preston, Bruce J. - 2008

This paper analyzes how the formation of expectations constrains monetary and fiscal policy design. Economic agents have imperfect knowledge about the economic environment and the policy regime in place. Households and firms learn about the policy regime using historical data. Regime uncertainty...

Persistent link: https://www.econbiz.de/10014214924

What Fiscal Policy is Effective at Zero Interest Rates?

Eggertsson, Gauti B. - 2009

Tax cuts can deepen a recession if the short-term nominal interest rate is zero, according to a standard New Keynesian business cycle model. An example of a contractionary tax cut is a reduction in taxes on wages. This tax cut deepens a recession because it increases deflationary pressures....

Persistent link: https://www.econbiz.de/10014201081

Minimum Price Increment, Competition for Liquidity Provision, and Price Discovery

Fleming, Michael J.; Nguyen, Giang; Ruela, Francisco - 2021

depth, and improved price efficiency.Moreover, slow traders become more competitive in liquidity provision and price …

Persistent link: https://www.econbiz.de/10013244513

Rediscounting Under Aggregate Risk With Moral Hazard

Chapman, James T. E.; Martin, Antoine - 2007

In a 1999 paper, Freeman proposes a model in which discount window lending and open market operations have different outcomes - an important development because in most of the literature the results of these policy tools are indistinguishable. Freeman's conclusion that the central bank should...

Persistent link: https://www.econbiz.de/10014225041

Short-Run Fiscal Policy : Welfare, Redistribution, and Aggregate Effects in the Short and Long Run

Kitao, Sagiri - 2010

This paper quantifies the effects of two short-run fiscal policies, a temporary tax cut and a temporary rebate transfer, that are intended to stimulate economic activity. A reduction in income taxation provides immediate incentives to work and save more, raising aggregate output and consumption....

Persistent link: https://www.econbiz.de/10013144446