Showing 1 - 10 of 38
Most countries have automatic rules in their tax-and-transfer systems that are partly intended to stabilize economic fluctuations. This paper measures how effective they are. We put forward a model that merges the standard incomplete-markets model of consumption and inequality with the new...
Persistent link: https://www.econbiz.de/10013082764
Should the generosity of unemployment benefits and the progressivity of income taxes depend on the presence of business cycles? This paper proposes a tractable model where there is a role for social insurance against uninsurable shocks to income and unemployment, as well as inefficient business...
Persistent link: https://www.econbiz.de/10012988499
Early studies of business cycles argued that contractions in economic activity were briefer (shorter) and more violent (rapid) than expansions. This paper systematically investigates this claim and in the process discovers a robust new business cycle fact: expansions and contractions in output...
Persistent link: https://www.econbiz.de/10012778367
We provide new time-varying estimates of the housing wealth effect back to the 1980s. These estimates are based on a new identification strategy that exploits systematic differences in city-level exposure to regional house price cycles as an instrument for house prices. Our estimates of housing...
Persistent link: https://www.econbiz.de/10012916597
We present a simple model with income risk and borrowing constraints which yields a “discounted Euler equation.” This feature of the model mutes the extent to which news about far future real interest rates (i.e., forward guidance) affects current outcomes. We show that this simple model...
Persistent link: https://www.econbiz.de/10012995524
In recent years, central banks have increasingly turned to “forward guidance” as a central tool of monetary policy, especially as interest rates around the world have hit the zero lower bound. Standard monetary models imply that far future forward guidance is extremely powerful: promises...
Persistent link: https://www.econbiz.de/10013029553
In a fixed-cost model of durable consumption demand, we show that an important channel of monetary policy transmission is to prompt households to accelerate the timing of their adjustments. We highlight three ways in which the power of monetary policy is reduced relative to the standard New...
Persistent link: https://www.econbiz.de/10012864148
Recent empirical work uses variation across cities or regions to identify the effects of economic shocks of interest to macroeconomists. The interpretation of such estimates is complicated by the fact that they reflect both partial equilibrium and local general equilibrium effects of the shocks....
Persistent link: https://www.econbiz.de/10013311651
Durable goods attenuate the power of forward guidance. The extensive and intensive margins of durable goods demand are both more sensitive to the contemporaneous user cost than to future user costs. Changes in the contemporaneous real interest rate directly affect the contemporaneous user cost...
Persistent link: https://www.econbiz.de/10014259845
Central banks affect the resources available to fiscal authorities through the impact of their policies on the public debt, as well as through their income, their mix of assets, their liabilities, and their own solvency. This paper inspects the ability of the central bank to alleviate the fiscal...
Persistent link: https://www.econbiz.de/10012966585