Found 392 article(s) in category 'Monetary Policy'

Investment Cycles and Sovereign Debt Overhang

Investment Cycles and Sovereign Debt Overhang. Aguiar, Mark, Manuel Amador, and Gita Gopinath, 2009, Paper. “We characterize optimal taxation of foreign capital and optimal sovereign debt policy in a small open economy where the government cannot commit to policy, seeks to insure a risk-averse domestic constituency, and is more impatient than the market. Optimal policy generates long-run cycles in both sovereign debt and foreign direct investment in an environment in which the first best capital stock is a constant. The expected tax on capital endogenously varies with the state of the economy, and investment is distorted…” Link

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The Euro and Structural Reforms

The Euro and Structural Reforms. Alberto Alesina, November 2008, Paper. “This paper investigates whether or not the adoption of the Euro has facilitated the introduction of structural reforms, defined as deregulation in the product markets and liberalization and deregulation in the labor markets. After reviewing the theoretical arguments that may link the adoption of the Euro and structural reforms, we investigate the empirical evidence. We find that the adoption of the Euro has been associated with an acceleration of the pace of structural reforms in the product market…” Link

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Financial Constraints and Growth: Multinational and Local Firm Responses to Currency Crises

Financial Constraints and Growth: Multinational and Local Firm Responses to Currency Crises. Mihir A. Desai, C. Fritz Foley, November 2008. “This paper examines how financial constraints and product market exposures determine the response of multinational and local firms to sharp depreciations. U.S. multinational affiliates increase sales, assets, and investment significantly more than local firms during, and subsequent to, depreciations. Differing product market exposures do not explain these differences in performance. Instead, a differential ability to circumvent financial constraints is a significant determinant…” Link

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Can Exchange Rates Forecast Commodity Prices?

Can Exchange Rates Forecast Commodity Prices? Kenneth Rogoff, June 29, 2008, Paper. “We show that “commodity currency” exchange rates have remarkably robust power in predicting global commodity prices, both in-sample and out-of-sample, and against a variety of alternative benchmarks. This result is of particular interest to policymakers, given the lack of deep forward markets in many individual commodities, and broad aggregate commodity indices in particular. We also explore the reverse relationship (commodity prices forecasting exchange rates) but Önd it to be notably less robust…” Link

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A Gap-Filling Theory of Corporate Debt Maturity Choice

A Gap-Filling Theory of Corporate Debt Maturity Choice. Jeremy Stein, Robin Greenwood, Samuel Hanson, June 2008, Paper. “We argue that time-series variation in the maturity of aggregate corporate debt issues arises because firms behave as macro liquidity providers, absorbing the large supply shocks associated with changes in the maturity structure of government debt. We document that when the government funds itself with relatively more short-term debt, firms fill the resulting gap by issuing more long-term debt, and vice-versa. This type of liquidity provision is undertaken more aggressively: i) in periods when the ratio…” Link

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Productivity Growth and Countercyclical Budgetary Policy: What Do We Learn from OECD Panel Data?

Productivity Growth and Countercyclical Budgetary Policy: What Do We Learn from OECD Panel Data? Philippe Aghion, June 2008, Paper. “A common view among macroeconomists is that there is a decoupling between macroeconomic policy (e.g., budget deficit, taxation, money supply), which should primarily affect price and income stability and long-run economic growth, which, if anything, should depend only upon structural characteristics of the economy (property right enforcement, market structure, market mobility, and so forth). That macroeconomic policy should not be a key determinant of growth…” Link

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Taxation, Efficiency, and Economic Growth

Taxation, Efficiency, and Economic Growth. Dale Jorgenson, Mun Ho, May 9, 2008, Book Chapter. “In this paper we model U.S. labor supply and demand over the next 25 years. Despite the anticipated aging of the population, moderate population growth will provide growing supplies of labor well into the 21st century. Improvements in labor quality due to greater education and experience will also continue for some time, but will eventually disappear. Productivity growth for the U.S. economy will be below long-term historical averages, but labor-using technical change will be a stimulus to the growth of labor demand. Year to-year changes in economic...” Link

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Asset Prices & Monetary Policy

Asset Prices & Monetary Policy. John Campbell, 2008, Book. “Economic growth, low inflation, and financial stability are among the most important goals of policy makers, and central banks such as the Federal Reserve are key institutions for achieving these goals. In ‘Asset Prices and Monetary Policy,’ leading scholars and practitioners probe the interaction of central banks, asset markets, and the general economy to forge a new understanding of the challenges facing policy makers as they manage an increasingly complex economic systemThe contributors examine how central bankers determine their policy…” (May require user account or purchase) Link

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Assessing pacification policy in Iraq: Evidence from Iraqi financial markets

Assessing pacification policy in Iraq: Evidence from Iraqi financial markets. Eric Chaney, 2008, Paper. “At the end of January, 2006 the Iraqi government issued roughly $2.7 billion of debt in exchange for over $20 billion of Saddam-era commercial claims. This paper uses variation in the yield spread of this sovereign debt to evaluate pacification policy in Iraq. Structural change models are run in conjunction with conventional event study analysis. Results detail a mixed market reaction towards pacification policies implemented through August, 2006…” May require purchase or user account. Link

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Happiness, Contentment and other Emotions for Central Banks

Happiness, Contentment and other Emotions for Central Banks. Rafael Di Tella, November 7, 2007, Paper. “We show that data on satisfaction with life from over 600,000 Europeans are negatively correlated with the unemployment rate and the inflation rate. Our preferred interpretation is that this shows that emotions are affected by macroeconomic fluctuations. Contentment is, at a minimum, one of the important emotions that central banks should focus on. More ambitiously, contentment might be considered one of the components of utility. The results may help central banks understand the tradeoffs that the public is willing to accept in terms of unemployment for inflation, at least in terms of keeping the average level of one particular emotion (contentment) constant…” Link

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