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Acharya, Sushant; Pesenti, Paolo A. - 2024

Keynesian model. Relative to Representative Agent (RANK) models, our framework introduces a precautionary-savings channel, as … households in both countries face uninsurable income risk, and a real-income channel, as households have heterogeneous marginal … propensities to consume (MPC). While both channels amplify the size of spillovers/spillbacks, only precautionary savings can change …

Persistent link: https://www.econbiz.de/10014501129

The optimal supply of central bank reserves under uncertainty

Afonso, Gara; La Spada, Gabriele; Mertens, Thomas; … - 2023 - Revised December 2023

This paper provides an analytically tractable theoretical framework to study the optimal supply of central bank reserves when the demand for reserves is uncertain and nonlinear. We fully characterize the optimal supply of central bank reserves and associated market equilibrium. We find that the...

Persistent link: https://www.econbiz.de/10014426250

The Federal Reserve and market confidence

Boyarchenko, Nina; Haddad, Valentin; Plosser, Matthew C. - 2016

We discover a novel monetary policy shock that has a widespread impact on aggregate financial conditions. Our shock can be summarized by the response of long-horizon yields to Federal Open Market Committee (FOMC) announcements; not only is it orthogonal to changes in the near-term path of policy...

Persistent link: https://www.econbiz.de/10011446542

Monetary policy and the run risk of loan funds

Cetorelli, Nicola; La Spada, Gabriele; Santos, João A. C. - 2022

funds are significantly more susceptible to run risk than any other category of debt funds, including corporate bond funds …

Persistent link: https://www.econbiz.de/10013162106

The side effects of safe asset creation

Acharya, Sushant; Dogra, Keshav - 2018

interest rate environment. Higher risk increases the demand for safe assets, lowering the natural rate of interest below zero …

Persistent link: https://www.econbiz.de/10011806268

Monetary policy implementation frameworks : a comparative analysis

Martin, Antoine (contributor); Monnet, Cyril (contributor) - 2008

We compare two stylized frameworks for the implementation of monetary policy. The first framework relies only on standing facilities, and the second one relies only on open market operations. We show that the Friedman rule cannot be implemented in the first framework, but can be implemented...

Persistent link: https://www.econbiz.de/10003781450

Monetary policy analysis with potentially misspecified models

Del Negro, Marco (contributor); … - 2008

Policy analysis with potentially misspecified dynamic stochastic general equilibrium (DSGE) models faces two challenges: estimation of parameters that are relevant for policy trade-offs and treatment of estimated deviations from the cross-equation restrictions. This paper develops and explores...

Persistent link: https://www.econbiz.de/10003781475

Optimal monetary policy under sudden stops

Cúrdia, Vasco (contributor) - 2008

Emerging market economies often face sudden stops in capital inflows or reduced access to the international capital market, a development that can cause serious disruptions in economic activity. This paper analyzes what monetary policy can accomplish in such an event. Optimal monetary policy...

Persistent link: https://www.econbiz.de/10003781480

Central bank transparency and nonlinear learning dynamics

Eusepi, Stefano (contributor) - 2008

Central bank communication plays an important role in shaping market participants’ expectations. This paper studies a simple nonlinear model of monetary policy in which agents have incomplete information about the economic environment. It shows that agents’ learning and the dynamics of the...

Persistent link: https://www.econbiz.de/10003781685

Stabilizing expectations under monetary and fiscal policy coordination

Eusepi, Stefano (contributor); Preston, Bruce (contributor) - 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/10003781690