D - Microeconomics

• Expectations and Monetary Policy: Experimental Evidence

  Staff Working Paper 2013-44 Oleksiy Kryvtsov, Luba Petersen

  The effectiveness of monetary policy depends, to a large extent, on market expectations of its future actions. In a standard New Keynesian business-cycle model with rational expectations, systematic monetary policy reduces the variance of inflation and the output gap by at least two-thirds.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Monetary policy implementation, Monetary policy transmission JEL Code(s): C, C9, D, D8, D84, E, E3, E5, E52

• Some Economics of Private Digital Currency

  Staff Working Paper 2013-38 Joshua S. Gans, Hanna Halaburda

  This paper reviews some recent developments in digital currency, focusing on platform-sponsored currencies such as Facebook Credits.

  Content Type(s): Staff research, Staff working papers Topic(s): Bank notes, Digital currencies and fintech, Economic models, Payment clearing and settlement systems JEL Code(s): D, D4, D42, E, E4, L, L5, L51

• The Safety of Government Debt

  Staff Working Paper 2013-34 Kartik Anand, Prasanna Gai

  We examine the safety of government bonds in the presence of Knightian uncertainty amongst financial market participants. In our model, the information insensitivity of government bonds is driven by strategic complementarities across counterparties and the structure of trading relationships.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Financial stability, International financial markets JEL Code(s): D, D8, D81, E, E4, E44, F, F0, F02, F4, F41, G, G1, G15

• The ‘Celtic Crisis’: Guarantees, Transparency and Systemic Liquidity Risk

  Staff Working Paper 2013-31 Philipp König, Kartik Anand, Frank Heinemann

  Bank liability guarantee schemes have traditionally been viewed as costless measures to shore up investor confidence and prevent bank runs. However, as the experiences of some European countries, most notably Ireland, have demonstrated, the credibility and effectiveness of these guarantees are crucially intertwined with the sovereign’s funding risks.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial stability, Financial system regulation and policies JEL Code(s): D, D8, D89, G, G0, G01, G2, G28

• The Threat of Counterfeiting in Competitive Search Equilibrium

  Staff Working Paper 2013-22 Enchuan Shao

  Recent studies in monetary theory show that if buyers can use lotteries to signal the quality of bank notes, counterfeiting does not occur in a pooling equilibrium. In this paper, I investigate the robustness of this non-existence result by considering an alternative trading mechanism.

  Content Type(s): Staff research, Staff working papers Topic(s): Bank notes JEL Code(s): D, D8, D82, D83, E, E4, E42

• Are Sunspots Learnable? An Experimental Investigation in a Simple General-Equilibrium Model

  Staff Working Paper 2013-14 Jasmina Arifovic, George Evans, Olena Kostyshyna

  We conduct experiments with human subjects in a model with a positive production externality in which productivity is a non-decreasing function of the average level of employment of other firms.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models JEL Code(s): D, D8, D83, G, G2, G20

• A Tractable Monetary Model Under General Preferences

  Staff Working Paper 2013-7 Tsz-Nga Wong

  Consider the monetary model of Lagos and Wright (JPE 2005) but with general preferences and general production. I show that preferences satisfying UXXUHH – (UXH)2 = 0 is a sufficient condition for the existence and uniqueness of monetary equilibrium with degenerate money distribution.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models JEL Code(s): D, D8, D83, E, E4, E40

• House Prices, Consumption and the Role of Non-Mortgage Debt

  Staff Working Paper 2013-2 Katya Kartashova, Ben Tomlin

  This paper examines the relationship between house prices and consumption, through the use of debt. Using unique Canadian household-level data that reports the uses of debt, we begin by looking at the relationship between house prices and debt.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Domestic demand and components JEL Code(s): D, D1, D10, D14, D3, D31, E, E2, E21