Macroeconomics: Monetary & Fiscal Policies eJournal最新文献

{"title":"Monetary and Macroprudential Policy Coordination with Biased Preferences","authors":"P. Agénor, Timothy P. Jackson","doi":"10.2139/ssrn.3911173","DOIUrl":"https://doi.org/10.2139/ssrn.3911173","url":null,"abstract":"This paper studies the extent to which biased policy preferences, motivated by narrow institutional mandates, affect the gains from coordination between monetary policy(which may respond to financial imbalances) and macroprudential regulation (in the form of capital requirements) in responding to financial stability considerations, and whether these mandates can be set optimally. Numerical experiments show that, depending on the degree of bias in policy preferences, coordination may not entail burden sharing (in the sense of one policymaker reacting more, and the other less, aggressively to financial stability concerns) and may not be Pareto improving relative to the Nash equilibrium–even though it can generate significant gains for the economy as a whole. The optimal institutional mandate, based on maximizing household welfare under coordination, internalizes the impact of the cost of each policymaker’s own instrument use on policy decisions. As a result, there may be an inverse relationship between the degree of bias in preferences and the instrument cost.","PeriodicalId":244949,"journal":{"name":"Macroeconomics: Monetary & Fiscal Policies eJournal","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2022-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114809621","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Bitcoin: A New Digital Gold Standard in the 21st Century?","authors":"John Taskinsoy","doi":"10.2139/ssrn.3941857","DOIUrl":"https://doi.org/10.2139/ssrn.3941857","url":null,"abstract":"Since a mysterious creator under the alias Satoshi Nakamoto (a pseudonym) launched first successful cryptocurrency in January 2009, he (or could be she) also opened the door for never-ending criticism, claims, arguments, plethora of articles, and media frenzy all contemplating what Bitcoin is. This paper concludes that Bitcoin is not a currency to be used for every-day transactions like all fiat currencies. Furthermore, Bitcoin is not a stable cryptocurrency and it is useless (and impractical) of arguing how Bitcoin meets or fails basic functions of money; to make it clear, Bitcoin satisfies all three functions of money (not to the extent of fiat currencies, nonetheless it does); store of value, unit of account, and medium of exchange. As discussed in this article, our proposal of Bitcoin as a supranational central bank reserve currency not only will put an end to debates and the frequently asked old question of “what is Bitcoin?”, it will also make Bitcoin’s design flaws disappear instantly. Under the new Bitcoin standard (Gold 2.0), inefficiencies become trivial because Bitcoin is capable of easily handling the volume of operations among central banks. Bitcoin’s extensively discussed weaknesses become no issue; high latency (a block of transactions is validated every 10 minutes), low processing speed (3-7 transactions per second), huge power cost (mining of 1 bitcoin requires 1,825 kWh of electricity, equivalent to 63 days of power usage by a U.S. household), and low scalability (the maximum number of bitcoins is fixed at 21 million). Key elements of the proposed new Bitcoin Standard include: Bitcoin will be a supranational reserve currency used by central banks only; ownership, trade, and other uses of bitcoins by citizens and various entities will be prohibited; the fixed supply of bitcoins (21 million) will remain unchanged; every country’s financial authority will switch to central bank digital coins (CBDC); CBDCs will be defined in bitcoin by a corresponding exchange rate for each country; 100% of CBDCs will be 100% backed by bitcoins; any increase in the digital money supply by a central bank will require additional bitcoins; and the value of each bitcoin will be raised to a price level to cover 100% of the total money in circulation (approximately $75 trillion).","PeriodicalId":244949,"journal":{"name":"Macroeconomics: Monetary & Fiscal Policies eJournal","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-10-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128245699","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Zombie Lending and Policy Traps","authors":"V. Acharya, Simone Lenzu, Olivier Wang","doi":"10.2139/ssrn.3936064","DOIUrl":"https://doi.org/10.2139/ssrn.3936064","url":null,"abstract":"We build a model with heterogeneous firms and banks to analyze how policy can affect the efficiency of credit allocation and long-term economic outcomes. When transitory demand or productivity shocks are small, conventional monetary policy can restore efficient bank lending and production by lowering interest rates. For moderately large shocks, however, conventional policy may hit the effective lower bound, necessitating unconventional policy such as regulatory forbearance towards banks to stabilize the economy. Aggressive unconventional policy runs the risk of introducing zombie lending and a “diabolical sorting”, whereby low-capitalization banks extend new credit or evergreen existing loans to low-productivity firms. In a dynamic setting, policy aimed at avoiding short-term recessions can be trapped into protracted excessive forbearance due to congestion externalities imposed by zombie lending on healthier firms. The resulting economic sclerosis transforms transitory shocks into phases of delayed recovery and potentially permanent output losses. Our model highlights the importance of maintaining a well-capitalized banking system to avoid such policy traps as not raising capital requirements upfront but raising them significantly upon the arrival of shocks can also backfire by encouraging zombie lending.","PeriodicalId":244949,"journal":{"name":"Macroeconomics: Monetary & Fiscal Policies eJournal","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-10-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128350585","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Democracy or Optimal Policy: Income Tax Decisions Without Commitment","authors":"Youngsoo Jang","doi":"10.2139/ssrn.3945490","DOIUrl":"https://doi.org/10.2139/ssrn.3945490","url":null,"abstract":"How do differences in the government's political and commitment structure affect the aggregate economy, inequality, and welfare? I analyze this question, using a calibrated Ayagari's (1994) economy with wealth effects of labor supply wherein a flat tax rate and transfers are endogenously determined according to its political and commitment structure. I compare four economies: a baseline economy, an economy with the optimal tax with commitment in all steady states, an economy with the optimal tax without commitment, and a political economy with sequential voting. I obtain two main findings. First, the commitment structure shifts the government's weighting between redistribution and efficiency. A lack of commitment leads the government to pursue a more redistributive policy at the expense of efficiency. Second, given a lack of commitment, the political economy with voting yields greater welfare than the economy with the time-consistent optimal policy. In the latter case, a lack of commitment hinders the government from implementing a more frugal policy desirable in the long run; instead, it cares more for low-income and wealth households, resulting in a substantial efficient loss. However, in the political economy with voting, the government considers only the interests of the median voter, who is middle class and reluctant to bear larger distortions from a higher tax rate and larger transfers. These findings imply that in terms of welfare, policies targeting the middle class would possibly be better than those exquisitely designed for the general public.","PeriodicalId":244949,"journal":{"name":"Macroeconomics: Monetary & Fiscal Policies eJournal","volume":"517 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127613913","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Subjective Shadow Rate Beliefs at the Zero Lower Bound","authors":"M. Connolly, Ethan Struby","doi":"10.2139/ssrn.3579759","DOIUrl":"https://doi.org/10.2139/ssrn.3579759","url":null,"abstract":"We investigate the sensitivity of estimates of the \"shadow rate\", the counterfactual one-period interest rate that would obtain absent the zero lower bound. Using U.S. Treasury forward rates and short-term survey forecasts, we estimate models with different factor structures and assumptions about forecasts. Revisiting the channels of monetary policy from 2008-15, we find robust evidence of a structural break in monetary policy transmission before and after the Great Recession. While most models agree on the effects of calendar-based forward guidance, only models with distorted forecasts attribute non-trivial portions of announcement effects to expectations of short-term rates rather than term premia.","PeriodicalId":244949,"journal":{"name":"Macroeconomics: Monetary & Fiscal Policies eJournal","volume":"77 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124508118","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Would Households Understand Average Inflation Targeting?","authors":"Mathias Hoffmann, E. Moench, Guido Schultefrankenfeld, Lora Pavlova","doi":"10.2139/ssrn.3936440","DOIUrl":"https://doi.org/10.2139/ssrn.3936440","url":null,"abstract":"Yes, they would. We collect medium- and longer-term inflation expectations from 9,000 individuals in Germany. Unconditionally, the average probability mass is well-centered around the ECB’s inflation aim of 2%. In a randomized control trial, we subject groups of respondents with information about a hypothetical alternative ECB monetary policy regime akin to the Federal Reserve’s flexible average inflation targeting (AIT). Inflation expectations significantly increase for the treated individuals. When provided with additional assumptions about current inflation, individuals update their expected inflation path in line with the central banks’ intentions. Individuals with a high trust in the ECB’s ability to achieve price stability adjust their inflation expectations particularly strongly. We assess the economic significance of our findings by comparing two model economies under different monetary policy strategies, calibrated to match the difference in medium-term inflation expectations from our survey results. Inflation is six times less volatile and the frequency of hitting the lower bound of interest rates substantially reduced under AIT.","PeriodicalId":244949,"journal":{"name":"Macroeconomics: Monetary & Fiscal Policies eJournal","volume":"297 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128636780","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The SOFR and the Fed's Influence Over Market Interest Rates","authors":"Ivan Indriawan, Feng Jiao, Y. Tse","doi":"10.2139/ssrn.3867692","DOIUrl":"https://doi.org/10.2139/ssrn.3867692","url":null,"abstract":"The secured overnight financing rate (SOFR) is the successor to LIBOR (London interbank offered rate) as a benchmark rate for lending in US dollars. Our results show that the SOFR aligns with the Federal Reserve's policy target more closely than LIBOR. In addition, short-term market rates are more responsive to the SOFR than to LIBOR. Our findings highlight the advantages of the new benchmark rate over its predecessor.","PeriodicalId":244949,"journal":{"name":"Macroeconomics: Monetary & Fiscal Policies eJournal","volume":"160 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-09-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116237052","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"State-Dependent Central Bank Communication with Heterogeneous Beliefs","authors":"Sylvérie Herbert","doi":"10.2139/ssrn.3923047","DOIUrl":"https://doi.org/10.2139/ssrn.3923047","url":null,"abstract":"This paper studies the optimal disclosure strategy of a Sender who wants to influence hetero-geneous Receivers' expectations by providing public information. I introduce heterogeneous priors in an otherwise standard Bayesian persuasion model a la Gentzkow and Kamenica (2011) and characterize the dependence of optimal disclosure on the heterogeneity of beliefs. I show that heterogeneity matters in two ways: (i) it is optimal to send moderating signals, which implies sending signals with positive error probabilities in both states, and constitutes a non-trivial departure from the homogeneous beliefs case; (ii) higher dispersion in beliefs leads the information authority to send signals with lower error probabilities. I apply my framework to a central bank communication problem in which the policy maker communicates about aggregate conditions to influence rms' investment decisions. I empirically validate the model's predictions by showing that the FOMC unemployment rate forecasts are systematically biased in opposite directions in recessions and expansions. Also in line with the model's predictions, the forecast biases are decreasing in the degree of private sector disagreement for each state.","PeriodicalId":244949,"journal":{"name":"Macroeconomics: Monetary & Fiscal Policies eJournal","volume":"220 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-09-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127157028","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Testing for Spurious Dynamics in Structural Models with Applications to Monetary Policy","authors":"M. Dmitriev, Manoj Atolia","doi":"10.2139/ssrn.3831934","DOIUrl":"https://doi.org/10.2139/ssrn.3831934","url":null,"abstract":"We propose a universal and straightforward test for validating assumptions in the structural models. Structural models impose a causal structure, take data as an input, and then produce exact structural parameters. We simulate the new data while breaking the original causal structure. We then feed the model the simulated data and then see whether it produces different results. If its conclusions are the same, then the models' implications are not sensitive to the underlying data, and the model fails the test. We then apply our test to the models analyzing monetary policy. We find out that simple SVARs successfully pass the test and can be used to identify monetary policy effects. On the other hand, DSGE models estimated via full-information methods such as Smets and Wouters (2007) fail the test and potentially force their conclusions on the data.","PeriodicalId":244949,"journal":{"name":"Macroeconomics: Monetary & Fiscal Policies eJournal","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-08-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129363410","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Very Simple Mathematical Model of MMT (Modern Monetary Theory)","authors":"Yasuhito Tanaka","doi":"10.2139/ssrn.3905694","DOIUrl":"https://doi.org/10.2139/ssrn.3905694","url":null,"abstract":"The purpose of this paper is to provide a concise theoretical and mathematical foundation for the major parts of the debate in the recently discussed school of economics called Modern Monetary Theory (MMT), while maintaining the basics of the neoclassical microeconomic framework, such as utility maximization of consumers using budget constraints and utility functions, and equilibrium of demand and supply of goods under perfect competition with constant returns to scale technology. By a two-periods overlapping generations (OLG) model in which the economy grows by technological progress, we will show that: 1) We need a budget deficit to achieve full employment with constant price when the economy grows by technological progress. This budget deficit should not be offset by future surplus; 2) A budget deficit that exceeds the level necessary to maintain full employment in a growing economy with constant price will cause inflation. A stable budget deficit is required to prevent further inflation; 3) A budget deficit that is insufficient to maintain full employment will cause a recession with involuntary unemployment. A budget deficit larger than the one necessary and sufficient to maintain full employment without a recession can overcome a recession caused by insufficient budget deficit and restore full employment. The deficit created to overcome the recession should not be offset by subsequent surpluses, since full employment can then be maintained through constant budget deficits.","PeriodicalId":244949,"journal":{"name":"Macroeconomics: Monetary & Fiscal Policies eJournal","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-08-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116907099","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}