Showing 1 - 9 of 9
Out of four major structural changes affecting the US economy - namely a rising share of skilled workers, skill-biased technological change, decreasing progressiveness of taxation and productivity slowdown - we show that the decline in productivity growth not only is the main driver of the...
Persistent link: https://www.econbiz.de/10014476220
We develop a business cycle model with gross flows of firm creation and destruction.The credit market is characterized by two frictions. First,entrepreneurs undergo a costly search for intermediate funding to create a firm. Second, upon a match, a costlystate-verification contract is set up....
Persistent link: https://www.econbiz.de/10012148336
The creation of the European Monetary Union (EMU) in 1999 was expected to become a catalyst for real convergence in Europe. Far from being the case, real divergence increased from the early 1990s as evidenced by low productivity growth in the "periphery" of the Euro area relative to "core"...
Persistent link: https://www.econbiz.de/10012232187
The scale of public expenditure to be incurred in the Covid-19 health crisis is raising heated debates about the appropriate funding. Long rejected by mainstream macroeconomics due to its possible inflationary consequences, monetization is currently undergoing a surprising rehabilitation....
Persistent link: https://www.econbiz.de/10012237662
European banks are stronger today than they were on the eve of the 2007-2008 financial crisis, thanks to the reforms that have taken place since then. But will they be strong enough in the face of a health crisis closer to the Great Depression of the 1930s than the stress-test scenarios...
Persistent link: https://www.econbiz.de/10012237664
Using a Markov-switching VAR, we show that the effects of uncertainty shocks on output are four times higher in a regime of economic distress than in a tranquil regime. We then provide a structural interpretation of these facts. To do so, we develop a business cycle model in which agents are...
Persistent link: https://www.econbiz.de/10013189741
We construct, and then estimate by maximum likelihood, a tractable dynamic stochastic general equilibrium model with incomplete insurance and heterogenous agents. The key feature of our framework is that cross-sectional heterogeneity remains finite dimensional. The solution to the model thus...
Persistent link: https://www.econbiz.de/10011995494
We study how changes in the steady-state real interest rate affect the optimal inflation target in a New Keynesian DSGE model with trend inflation and a lower bound on the nominal interest rate. In this setup, a lower steady-state real interest rate increases the probability of hitting the lower...
Persistent link: https://www.econbiz.de/10012388954
We address the question in this paper's title using an estimated New Keynesian DSGE model of the euro area with trend inflation, imperfect indexation, and a lower bound on the nominal interest rate. In this setup, a decrease in the steady-state real interest rate, r*, increases the probability...
Persistent link: https://www.econbiz.de/10012882653