Monetary Policy, Incomplete Information, and the Zero Lower Bound
Author:
Publisher:
Published: 2015
Total Pages:
ISBN-13:
DOWNLOAD EBOOKPosts
Money: Theory and Practice
Author: Jin Cao
Publisher: Springer Nature
Published: 2019-12-07
Total Pages: 412
ISBN-13: 3030196976
DOWNLOAD EBOOKThis textbook provides an introduction to modern monetary economics for advanced undergraduates, highlighting the lessons learned from the recent financial crisis. The book presents both the core New Keynesian model and recent advances, taking into account financial frictions, and discusses recent research on an intuitive level based on simple static and two-period models, but also prepares readers for an extension to a truly dynamic analysis. Further, it offers a systematic perspective on monetary policy, covering a wide range of models to help readers gain a better understanding of controversial issues. Part I examines the long-run perspective, addressing classical monetary policy issues such as determination of the price level and interaction between monetary and fiscal policy. Part II introduces the core New Keynesian model, characterizing optimal monetary policy to stabilize short-term shocks. It discusses rules vs. discretion and the challenges arising from control errors, imperfect information and robustness issues. It also analyzes optimal control in the presence of an effective lower bound. Part III focuses on modelling financial frictions. It identifies the transmission mechanisms of monetary policy via banking and introduces models with incomplete markets, principal-agent problems, maturity mismatch and leverage cycles, to show why investors’ and intermediaries’ own stakes play a key role in lending with pro-cyclical features. In addition, it presents a tractable model for handling liquidity management and demonstrates that the need to sell assets in crisis amplifies the volatility of the real economy. Lastly, the book discusses the relation between monetary policy and financial stability, addressing systemic risk and the role of macro-prudential regulation.
Circumventing the Zero Lower Bound with Monetary Policy Rules Based on Money
Author: Michael T. Belongia
Publisher:
Published: 2017
Total Pages: 46
ISBN-13:
DOWNLOAD EBOOKDiscussions of monetary policy rules after the 2007-2009 recession highlight the potential ineffectiveness of a central bank's actions when the short-term interest rate under its control is limited by the zero lower bound. This perspective assumes, in a manner consistent with the canonical New Keynesian model, that the quantity of money has no role to play in transmitting a central bank's actions to economic activity. This paper examines the validity of this claim and investigates the properties of alternative monetary policy rules based on control of the monetary base or a monetary aggregate in lieu of the capacity to manipulate a short-term interest rate. The results indicate that rules of this type have the potential to guide monetary policy decisions toward the achievement of a long-run nominal goal without being constrained by the zero lower bound on a nominal interest rate. They suggest, in particular, that by exerting its influence over the monetary base or a broader aggregate, the Federal Reserve could more effectively stabilize nominal income around a long-run target path, even in a low or zero interest-rate environment.
Discretionary Monetary Policy and the Zero Lower Bound on Nominal Interest Rates
Author:
Publisher:
Published: 2005
Total Pages:
ISBN-13:
DOWNLOAD EBOOKIgnoring the existence of the zero bound on nominal interest rates one considerably understates the value of monetary commitment in New Keynesian models. A stochastic forward-looking model with an occasionally binding lower bound, calibrated to the U.S. economy, suggests that low values for the natural rate of interest lead to sizeable output losses and deflation under discretionary monetary policy. The fall in output and deflation are much larger than in the case with policy commitment and do not show up at all if the model abstracts from the existence of the lower bound. The welfare losses of discretionary policy increase even further when inflation is partly determined by lagged inflation in the Phillips curve. These results emerge because private sector expectations and the discretionary policy response to these expectations reinforce each other and cause the lower bound to be reached much earlier than under commitment.
Coordination of Monetary and Fiscal Policies
Author: International Monetary Fund
Publisher: International Monetary Fund
Published: 1998-03-01
Total Pages: 33
ISBN-13: 1451844239
DOWNLOAD EBOOKRecently, monetary authorities have increasingly focused on implementing policies to ensure price stability and strengthen central bank independence. Simultaneously, in the fiscal area, market development has allowed public debt managers to focus more on cost minimization. This “divorce” of monetary and debt management functions in no way lessens the need for effective coordination of monetary and fiscal policy if overall economic performance is to be optimized and maintained in the long term. This paper analyzes these issues based on a review of the relevant literature and of country experiences from an institutional and operational perspective.
Temporary Equilibrium
Author: Jean-Michel Grandmont
Publisher:
Published: 1988
Total Pages: 520
ISBN-13:
DOWNLOAD EBOOKThe collection of journal articles reproduced in this volume provides a synthesis of the progress made in the last 15 years in the theory of temporary equilibrium. Key Features * Decision making * Competitive assets markets * Models of money * Deterministic dynamics * Stochastic processes * Quantity rationing
Monetary Policy and Financial Stability
Author: Ioanna T. Kokores
Publisher: Cambridge Scholars Publishing
Published: 2022-12-08
Total Pages: 497
ISBN-13: 1527591867
DOWNLOAD EBOOKThis book explores how monetary policy contributes to the efficient allocation of resources, with special reference made to the contribution of the effective workings of the financial system. It argues that the stability of the financial system promotes the smooth functioning of the payment systems and the effective transmission of monetary policy, thus promoting the achievement of monetary policy objectives. The interrelated issues addressed here include the ways various monetary policy objectives are achieved, their effective presentation to the public, and the strategic role of money growth in the conduct of monetary policy. The analysis underlines the context of financial-market performance in recent decades and the varied central bank responses to the emergence of the global financial crisis. This book constitutes a useful companion to graduate students in economics, researchers and business and central banking practitioners in understanding the unending quest of the shifting roles of money and financial practices to reconcile growth and stability.
Special Issue: Monetary Policy Under Incomplete Information
Author:
Publisher:
Published: 2003
Total Pages: 219
ISBN-13:
DOWNLOAD EBOOKLaw and Macroeconomics
Author: Yair Listokin
Publisher: Harvard University Press
Published: 2019-03-11
Total Pages: 281
ISBN-13: 0674976053
DOWNLOAD EBOOKAfter 2008, private-sector spending took a decade to recover. Yair Listokin thinks we can respond more quickly to the next meltdown by reviving and refashioning a policy approach, used in the New Deal, to harness law’s ability to function as a macroeconomic tool, stimulating or relieving demand as required under certain crisis conditions.
Monetary Policy Transmission in Emerging Markets and Developing Economies
Author: Mr.Luis Brandao-Marques
Publisher: International Monetary Fund
Published: 2020-02-21
Total Pages: 54
ISBN-13: 1513529730
DOWNLOAD EBOOKCentral banks in emerging and developing economies (EMDEs) have been modernizing their monetary policy frameworks, often moving toward inflation targeting (IT). However, questions regarding the strength of monetary policy transmission from interest rates to inflation and output have often stalled progress. We conduct a novel empirical analysis using Jordà’s (2005) approach for 40 EMDEs to shed a light on monetary transmission in these countries. We find that interest rate hikes reduce output growth and inflation, once we explicitly account for the behavior of the exchange rate. Having a modern monetary policy framework—adopting IT and independent and transparent central banks—matters more for monetary transmission than financial development.
