Found 413 article(s) in category 'Monetary Policy'

Is our Economy’s Financial Sector Worth What it Costs Us?

Is our Economy’s Financial Sector Worth What it Costs Us? Benjamin Friedman, November 11, 2011, Opinion. “In 1867, when the American economy was still largely agricultural, Horace Greeley, the editor of the New York Tribune, threw out the following challenge in a lecture that he gave in lower Manhattan: “There are 500,000 farmers, probably, in the State of New York to-day, who, if you were to ask each of them how much per bushel his corn had cost him to grow for the last twenty years, I doubt if fifty of the 500,000 could tell you. And this is but one instance out of ten thousand. Now, every grower of agricultural products…” Link

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EconomicDynamics Interviews Gita Gopinath on Sovereign Default

EconomicDynamics Interviews Gita Gopinath on Sovereign Default. Gita Gopinath, November 2011, Opinion. “The interaction between high public debt and the inability to devalue has come up frequently in discussions of the Euro crisis. However, there is an important distinction to be made. There are two channels through which a currency devaluation can help a government repay its debt: One, by reducing the real value of the debt owed and two by stimulating the economy through adjustments of the terms of trade and therefore raising primary fiscal surpluses for the government. The first channel is relevant to the extent that the debt is…” Link

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Limits of Monetary Policy in Theory and Practice

Limits of Monetary Policy in Theory and Practice. Carmen Reinhart, October 2011, Paper. “The view that modest alterations to monetary policy have vast consequences for national economies would seem to be inconsistent with theory and evidence. Most modern economic models (represented authoritatively by Woodford 2005) offer limited scope for policy surprises. The basic logic is that spending depends on decisions capitalized over the longer term, and small perturbations in the level of the short-term interest rate do not matter much to those values. More fundamentally, the prominence accorded to authorities…” Link verified March 28, 2014

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Cyclicality of Credit Supply: Firm Level Evidence

Cyclicality of Credit Supply: Firm Level Evidence. Victoria Ivashina, August 23, 2011, Paper. “Theory predicts that there is a close link between bank credit supply and the evolution of the business cycle. Yet fluctuations in bank-loan supply have been hard to quantify in the time- series. While loan issuance falls in recessions, it is not clear if this is due to demand or supply. We address this question by studying firms’ substitution between bank debt and non-bank debt (public bonds) using firm-level data. Any firm that raises new debt must have a positive demand for external funds. Conditional on issuance of new debt, we interpret firm’s switching…” Link

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An Exploration of Optimal Stabilization Policy

An Exploration of Optimal Stabilization Policy. N. Gregory Mankiw, Matthew Weinzierl, Spring 2011, Paper. “This paper examines the optimal response of monetary and fiscal policy to a decline in aggregate demand. The theoretical framework is a two-period general equilibrium model in which prices are sticky in the short run and flexible in the long run. Policy is evaluated by how well it raises the welfare of the representative household. Although the model has Keynesian features, its policy prescriptions differ significantly from those of textbook
Keynesian analysis. Moreover, the model suggests that the…” 
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An Exploration of Optimal Stabilization Policy

An Exploration of Optimal Stabilization Policy. Gregory Mankiw, Matthew Weinzierl, Spring 2011, Paper. “This paper examines the optimal response of monetary and fi…scal policy to a decline in aggregate demand. The theoretical framework is a two-period general equilibrium model in which prices are sticky in the short run and flexible in the long run. Policy is evaluated by how well it raises the welfare of the representative household. While the model has Keynesian features, its policy prescriptions differ significantly from textbook Keynesian analysis. Moreover, the model suggests that the commonly used “bang for the buck…” Link verified August 21, 2014

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Monetary Policy as Financial-Stability Regulation

Monetary Policy as Financial-Stability Regulation. Jeremy Stein, March 2011, Paper. “This paper develops a model that speaks to the goals and methods of financial-stability policies. There are three main points. First, from a normative perspective, the model defines the fundamental market failure to be addressed, namely that unregulated private money creation can lead to an externality in which intermediaries issue too much short-term debt and leave the system excessively vulnerable to costly financial crises. Second, it shows how in a simple economy where commercial banks are the only lenders, conventional monetary-policy…” Link

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The liquidation of government debt

The liquidation of government debt. Carmen Reinhart, March 2011, Paper. “Historically, periods of high indebtedness have been associated with a rising incidence of default or restructuring of public and private debts. A subtle type of debt restructuring takes the form of “financial repression.” Financial repression includes directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, regulation of cross-border capital movements, and (generally) a tighter connection between government and banks. In the heavily regulated financial markets of the Bretton Woods…” Link

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The Globalization Paradox – Democracy and the Future of the World Economy

The Globalization Paradox – Democracy and the Future of the World Economy. Dani Rodrik, February 2011, Book. “Surveying three centuries of economic history, a Harvard professor argues for a leaner global system that puts national democracies front and center. From the mercantile monopolies of seventeenth-century empires to the modern-day authority of the WTO, IMF, and World Bank, the nations of the world have struggled to effectively harness globalization’s promise. The economic narratives that underpinned these eras—the gold standard, the Bretton Woods regime, the “Washington Consensus”—brought great success and great failure…” May require purchase or user account. Link

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International Prices, Costs and Mark-up differences

International Prices, Costs and Mark-up differences. Gita Gopinath, August 17, 2010, Paper. “Relative cross-border retail prices, in a common currency, co-moves closely with the nominal exchange rate. Using a data set with product level retail prices and wholesale costs for a large grocery chain operating in the U.S. and Canada, we decompose this variation into relative wholesale costs and relative markup components. We find that the correlation of the nominal exchange rate with the real exchange rate is mainly driven by changes in relative wholesale costs, arguably the most tradable component of a retailer’s costs…” Link

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