3 edition of Shocks, structures or monetary policies? found in the catalog.
Shocks, structures or monetary policies?
Lawrence J. Christiano
The US Federal Reserve cut interest rates more vigorously in the recent recession than the European Central Bank did. By comparison with the Fed, the ECB followed a more measured course of action. We use an estimated dynamic general equilibrium model with financial frictions to show that comparisons based on such simple metrics as the variance of policy rates are misleading. We find that - because there is greater inertia in the ECB"s policy rule - the ECB"s policy actions actually had a greater stabilizing effect than did those of the Fed. As a consequence, a potentially severe recession turned out to be only a slowdown, and inflation never departed from levels consistent with the ECB"s quantitative definition of price stability. Other factors that account for the different economic outcomes in the Euro Area and US include differences in shocks and differences in the degree of wage and price flexibility.
|Statement||Lawrence Christiano, Roberto Motto, Massimo Rostagno.|
|Series||NBER working paper series -- no. 13521., Working paper series (National Bureau of Economic Research) -- working paper no. 13521.|
|Contributions||Motto, Roberto., Rostagno, Massimo., National Bureau of Economic Research.|
|The Physical Object|
|Pagination||28,  p. :|
|Number of Pages||28|
1. If most shocks to the economy are aggregate demand shocks or permanent aggregate supply shocks, then policy that stabilizes inflation will also stabilize economic activity, even in the short run. 2. If temporary supply shocks File Size: KB. April Monetary Policy Uncertainty and Monetary Policy Surprises. Michiel De Pooter, Giovanni Favara, Michele Modugno, and Jason Wu. Abstract: Monetary policy uncertainty affects the transmission of monetary policy shocks .
Billed as "A degree Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis", Mark Zandi's "Financial Shock" looks way beyond subprime mortgages, as /5(49). Search the world's most comprehensive index of full-text books. My library.
prices to monetary policy shocks in an internally consistent way. We organize the paper as follows. In section 2, we provide a brief review of the literature on stock prices and monetary policy shocks, and discuss the relevant monetary policy . Programs to support such worthy goals reside squarely in the domain of fiscal policy. The Fed can only make loans to solvent entities with the expectation the loans will be paid back. Direct fiscal support for the economy is thus also essential to sustain economic activity and complement what monetary policy .
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Published: Christiano, Lawrence & Motto, Roberto & Rostagno, Massimo, "Shocks, structures or monetary policies. The Euro Area and US after ," Journal of Economic Dynamics and Control.
“Shocks, structures or monetary policies. The euro area and US after ” by L. Christiano, R. Motto and M. Rostagno, July “A new approach to measuring competition in the loan.
monetary policies cannot abstract from a careful analysis of the shocks and the underlying economic structures that shape the macroeconomic landscape which central banks face. We concentrate on Cited by: On average, monetary policy shocks contributed % points over these four quarters, for a cumulative effect of roughly 3% of GDP.
The sequence of expansionary monetary policy shocks came to an end in the beginning ofwhen the strong positive technology shocks Cited by: economic structures and monetary policy rules.
The structures or monetary policies? book we use must be fairly elaborate if the set of shocks that we identify is to be credible. We want to include standard shocks such as disturbances to technology, govern-ment consumption, household preferences and monetary policy.
EA economies have somewhat diﬀerent structures and shocks, it is possible that if the Fed were literally in charge of the ECB, it might not have applied the same monetary policy strategy that it uses in the US. To answer the alternative question would require identifying the Fed’s objective function and then computing the monetary policy.
Christiano, Lawrence & Motto, Roberto & Rostagno, Massimo, "Shocks, structures or monetary policies. The Euro Area and US after ," Journal of Economic Dynamics and Control, Elsevier. policy shocks (Orphanides ). In addition, a persistent change of the inﬂation target can be interpreted as a serially correlated shock to monetary policy (see Smets and Wouters).
The empirical literature on Taylor rules has had trouble reaching a clear-cut conclusion about the correct representation of monetary policy. Monetary Policy and Credit Supply Shocks Simon Gilchrist Boston University potential beneﬁts of a monetary policy rule that allows the short-term nominal rate term structure cause economically.
Downloadable. In this paper, we analyse the interactions between monetary and macro-prudential policies and the circumstances under which such interactions call for their coordinated implementation.
We start with a review of the interdependencies between monetary and macro-prudential policies. researchers to understand the relationship between monetary policy, inﬂation, and the business cycle has led to the development of a framework—the so-called New Keynesian model—that is widely used for monetary policy analysis.
The following chapters offer an introduction to that basic framework and a discussion of its policy. Supply Shocks and the Conduct of Monetary Policy Takatoshi Ito As I see it, everybody else has considered this problem.
The supply shock is a major challenge to an inflation targeter. It has been agreed that against demand shocks File Size: KB.
Monetary Policy and Macroeconomic Shocks: Specification, Estimation and Analysis of Monetary Policy Reaction Function: A case of Ethiopia [Zerayehu Sime Eshete] on *FREE* shipping on qualifying offers.
The study examined responses of Central Bank of Ethiopia to macroeconomic shocks. Macroeconomic shocks in Ethiopia (until ) mainly came from non-monetary Author: Zerayehu Sime Eshete. the relationship between monetary policy, financial conditions, and financial vulnerabilities, also considering macroprudential policy.
Section three reviews recent literature on the transmission channels of monetary policy. Get this from a library.
Shocks, Structures or Monetary Policies. The Euro Area and US After [Lawrence Christiano; Roberto Motto; Massimo Rostagno] -- The US Federal Reserve cut interest. up to 47% of the variance attributed to exogenous monetary policy shocks.
Estimating a stochastic volatility model with these series conﬁrms this result. Critically, the peak in variance of exogenous monetary policy shocks. a monetary policy shock to an interest rule can be replicated by an appropriately parameterized money growth rule reacting solely to inﬂation and output.
This sug-gests a broad monetary aggregate could be used as the indicator of monetary policy in a recursive VAR for the purpose of identifying monetary policy shocks Cited by: 8. Ehrmann, M., L. Gambacorta, J. Martínez-Pagés, P. Sevestre and A. Worms (), Financial systems and the role of banks in monetary policy transmission in the Euro area, European Central Bank.
Alternative monetary policy shock measures from estimated Taylor rules also yield medium-sized real effects and indicate that the historical contribution of monetary policy shocks to.
changes in monetary policy institutions and rules. The literature has not yet converged on a particular set of assumptions for iden-tifying the e®ects of an exogenous shock to monetary policy.
Nevertheless, there is considerable agreement about the qualitative e®ects of a monetary policy shock. Fig. 2 shows the estimated impulse responses to structural shocks of the baseline Canadian model specified insince it has received considerable attention in the existing literature, we start our discussion with the responses of model variables to a contractionary monetary policy shock Cited by: The result is driven entirely by firms with low external financing premium, characterized by low book leverage and high book-to-market ratio.
Consistent with our empirical finding, when the financial accelerator is turned on in a calibrated DSGE model, the investment response to monetary policy shocks Author: Alex C.
Hsu.Supply-chain structures can be relevant for the impact of monetary policy and fiscal policy on investment, exports and imports.
Again, microdata will improve our understanding. 32 This work will .