Liquidity Effects, Variable Time Preference, and Optimal Monetary Policy
نویسندگان
چکیده
منابع مشابه
Liquidity, Credit Frictions, and Optimal Monetary Policy
We study optimal monetary policy in a NewMonetarist framework with banking, private liquidity, and credit frictions.We show that whenever part of the decentralized transactions are allowed to use deposit claims backed by interest-bearing assets, the optimal policy is a non-Friedman-rule liquidity trap. In contrast, the Friedman rule is optimal if there are no credit frictions, or if the economy...
متن کاملJointly optimal monetary and fiscal policy rules under liquidity constraints
In most cases authors are permitted to post their version of the article (e.g. in Word or Tex form) to their personal website or institutional repository. Authors requiring further information regarding Elsevier's archiving and manuscript policies are encouraged to visit: JEL classification: E32 E52 E62 E63 Keywords: Optimal simple policy rules Timeless perspective optimal policy Monetary polic...
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The paper models the interaction between risk taking in the financial sector and central bank policy for the case of pure illiquidity risk. It is shown that, when bad states are highly unlikely, public provision of liquidity may improve the allocation, even though it encourages more risk taking (less liquid investment) by private banks. In general, however, there is an incentive of financial in...
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In previous work (Eggertsson and Woodford, 2003), we characterized the optimal conduct of monetary policy when a real disturbance causes the natural rate of interest to be temporarily negative, so that the zero lower bound on nominal interest rates binds, and showed that commitment to a history-dependent policy rule can greatly increase welfare relative to the outcome under a purely forward-loo...
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This paper provides a framework to analyse emergency liquidity assistance of central banks on financial markets in response to aggregate and idiosyncratic liquidity shocks. The model combines the microeconomic view of liquidity as the ability to sell assets quickly and at low costs and the macroeconomic view of liquidity as a medium of exchange that influences the aggregate price level of goods...
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ژورنال
عنوان ژورنال: The B.E. Journal of Macroeconomics
سال: 2007
ISSN: 1935-1690
DOI: 10.2202/1935-1690.1216