E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit

• Do Sunspots Matter? Evidence from an Experimental Study of Bank Runs

  Staff Working Paper 2014-12 Jasmina Arifovic, Janet Hua Jiang

  A "sunspot" is a variable that has no direct impact on the economy’s fundamental condition, such as preferences, endowments or technologies, but may nonetheless affect economic outcomes through the expectations channel as a coordination device. This paper investigates how people react to sunspots in the context of a bank-run game in a controlled laboratory environment.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial markets, Financial stability JEL Code(s): C, C9, C91, C92, D, D8, D80, E, E5, E58, G, G2, G20

• Labor Market Participation, Unemployment and Monetary Policy

  Staff Working Paper 2014-9 Alessia Campolmi, Stefano Gnocchi

  We incorporate a participation decision in a standard New Keynesian model with matching frictions and show that treating the labor force as constant leads to incorrect evaluation of alternative policies.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Labour markets, Monetary policy transmission JEL Code(s): E, E2, E24, E3, E32, E5, E52