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The Great Depression and the Friedman-Schwartz hypothesis

Christiano, Lawrence; Motto, Roberto; Rostagno, Massimo - 2004

We evaluate the Friedman-Schwartz hypothesis that a more accommodative monetary policy could have greatly reduced the severity of the Great Depression. To do this, we first estimate a dynamic, general equilibrium model using data from the 1920s and 1930s. Although the model includes eight...

Persistent link: https://www.econbiz.de/10009636549

Inflation targets and the liquidity trap

Klaeffling, Matt; Perez, Victor Lopez - 2003

The presence of a lower bound of zero on nominal interest rates has important implications for the conduct of optimal monetary policy. Standard rational expectations models can have alternative steady states as well as non-unique laws of motion, i.e. there can be possible sunspot equilibria....

Persistent link: https://www.econbiz.de/10009635903

Price stability and monetary policy effectiveness when nominal interest rates are bounded at zero

Coenen, Günter; Orphanides, Athanasios; Wieland, Volker - 2003

target inﬂation rates as low as 2 percent. However, the effects of the constraint are non-linear with respect to the inﬂation … percent. The variability of output increases signiﬁcantly and that of inﬂation also rises somewhat. Also, we show that the … increasingly short of potential with lower inﬂation targets. …

Persistent link: https://www.econbiz.de/10009635983

The great inflation, limited asset markets participation and aggregate demand

Bilbiie, Florin O. - 2004

policy should be passive, to ensure equilibrium determinacy and to minimize variations in output and inflation. This paper … presents evidence that asset markets participation in the US was limited over the Great Inflation period and the slope of the … IS curve had the ’wrong’ sign. Our results may help explain the ’Great Inflation’ and give optimism for FED policy. If …

Persistent link: https://www.econbiz.de/10009639468

Swiss monetary policy targeting 1974 - 1996

Rich, Georg - 2003

adoption of monetary targets, the SNB was able to reduce the inflation trend to low levels. However, it was less successful in … preemptive policy stance. At the end of 1999, the SNB abandoned monetary targeting in favour of an approach based on inflation …

Persistent link: https://www.econbiz.de/10009635971

Financial factors in economic fluctuations

Christiano, Lawrence; Motto, Roberto; Rostagno, Massimo - 2010

We augment a standard monetary DSGE model to include a banking sector and financial markets. We fit the model to Euro Area and US data. We find that agency problems in financial contracts, liquidity constraints facing banks and shocks that alter the perception of market risk and hit financial...

Persistent link: https://www.econbiz.de/10009640348

Equilibrium unemployment, job flows and inflation dynamics

Trigari, Antonella - 2004

In order to explain the joint fluctuations of output, inflation and the labor market, this paper first develops a … helps to explain the sluggishness of inflation and the persistence of output after a monetary policy shock. The ability of … the model to account for the joint dynamics of output and inflation rely on its ability to explain the dynamics in the …

Persistent link: https://www.econbiz.de/10009636527

Downward nominal wage rigidity and the long-run Philips Curve

Coenen, Günter - 2003

the determination of inflation and output in the euro area and the existence of a non-vertical long-run Phillips curve …

Persistent link: https://www.econbiz.de/10009635901

Definition of price stability, range and point inflation targets

Castelnuovo, Efrem; Nicoletti-Altimari, Sergio; … - 2003

help anchoring inflation expectations. We use survey data on long-term inflation expectations in 15 industrial countries … since the early nineties to investigate how well anchored are inflation expectations. We find that in all countries except … Japan long-term inflation expectations are well anchored and, generally, increasingly so over the past decade. When …

Persistent link: https://www.econbiz.de/10009635904

Measuring the time-inconsistency of US monetary policy

Surico, Paolo - 2003

This paper offers an alternative explanation for the behavior of postwar US inflation by measuring a novel source of … end up generating a systematic inflation bias through the private sector expectations of a larger policy response in … recessions than in booms. Reduced-form estimates of US monetary policy rules indicate that while the inflation target declines …

Persistent link: https://www.econbiz.de/10009635891