To prepare for the 2021 renewal, our researchers studied the effectiveness of the monetary policy framework, assessed alternative frameworks and learned from the experience of other central banks.
24
result(s)
Social Learning and Monetary Policy at the Effective Lower Bound
Staff Working Paper 2020-2
Jasmina Arifovic,
Alex Grimaud,
Isabelle Salle,
Gauthier Vermandel
This research develops a model in which the economy is directly influenced by how pessimistic or optimistic economic agents are about the future. The agents may hold different views and update them as new economic data become available.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Central bank research,
Credibility,
Economic models,
Monetary policy,
Monetary policy communications
JEL Code(s):
C,
C8,
C82,
E,
E3,
E32,
E5,
E52
Monetary Policy and Government Debt Dynamics Without Commitment
Staff Working Paper 2019-52
Dmitry Matveev
I show that maturity considerations affect the optimal conduct of monetary and fiscal policy during a period of government debt reduction. I consider a New Keynesian model and study a dynamic game of monetary and fiscal policy authorities without commitment, characterizing the incentives that drive the choice of interest rate.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Fiscal policy,
Monetary policy
JEL Code(s):
E,
E5,
E52,
E6,
E62,
E63
Financial Frictions, Durable Goods and Monetary Policy
Staff Working Paper 2019-31
Ugochi Emenogu,
Leo Michelis
Financial frictions affect how much consumers spend on durable and non-durable goods. Borrowers can face both loan-to-value (LTV) constraints and payment-to-income (PTI) constraints.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Financial system regulation and policies,
Monetary policy
JEL Code(s):
E,
E4,
E44,
E5,
E52
Are Long-Horizon Expectations (De-)Stabilizing? Theory and Experiments
Staff Working Paper 2019-27
George Evans,
Cars Hommes,
Isabelle Salle,
Bruce McGough
Most models in finance assume that agents make trading plans over the infinite future. We consider instead that they are boundedly rational and may only form forecasts over a limited horizon.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Asset pricing,
Central bank research,
Economic models,
Financial markets
JEL Code(s):
C,
C9,
C92,
D,
D8,
D84,
E
The Effects of Inflation Targeting for Financial Development
Staff Analytical Note 2019-21
Geoffrey R. Dunbar,
Amy (Qijia) Li
The adoption of inflation targeting (IT) by central banks leads to an increase of 10 to 20 percent in measures of financial development, with a lag. We also find evidence that the financial sector benefits of IT adoption were higher for early-adopting central banks.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Financial institutions,
Inflation targets,
Monetary policy transmission
JEL Code(s):
E,
E4,
E44,
E5,
E58
Central Bank Communication That Works: Lessons from Lab Experiments
Staff Working Paper 2019-21
Oleksiy Kryvtsov,
Luba Petersen
We use controlled laboratory experiments to test the causal effects of central bank communication on economic expectations and to distinguish the underlying mechanisms of those effects. In an experiment where subjects learn to forecast economic variables, we find that central bank communication has a stabilizing effect on individual and aggregate outcomes and that the size of the effect varies with the type of communication.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Monetary policy implementation,
Monetary policy transmission
JEL Code(s):
C,
C9,
D,
D8,
D84,
E,
E3,
E5,
E52
Inflation Targeting and Liquidity Traps Under Endogenous Credibility
Staff Working Paper 2019-9
Cars Hommes,
Joep Lustenhouwer
Policy implications are derived for an inflation-targeting central bank, whose credibility is endogenous and depends on its past ability to achieve its targets. This is done in a New Keynesian framework with heterogeneous and boundedly rational expectations.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Credibility,
Monetary policy
JEL Code(s):
C,
C6,
C62,
E,
E3,
E32,
E5,
E52
Macroprudential Policy with Capital Buffers
Staff Working Paper 2019-8
Josef Schroth
The countercyclical capital buffer is part of Basel III, the set of regulatory measures developed in response to the financial crisis of 2007–09. This study focuses on how time-varying capital buffers can address inefficiencies in economies with endogenous financial crises.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Credit and credit aggregates,
Credit risk management,
Financial stability,
Financial system regulation and policies,
Lender of last resort
JEL Code(s):
E,
E1,
E13,
E3,
E32,
E4,
E44
The Distributional Effects of Conventional Monetary Policy and Quantitative Easing: Evidence from an Estimated DSGE Model
Staff Working Paper 2019-6
Stefan Hohberger,
Romanos Priftis,
Lukas Vogel
This paper compares the distributional effects of conventional monetary policy and quantitative easing (QE) within an estimated open-economy DSGE model of the euro area.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Economic models,
Interest rates,
Monetary policy,
Monetary policy transmission
JEL Code(s):
E,
E4,
E44,
E5,
E52,
F,
F4,
F41