Banks, sovereign risk and unconventional monetary policies

Auray, Stéphane; Eyquem, Aurélien; Ma, Xiaofei

doi:10.1016/j.euroecorev.2018.07.002

Cited by 18 publications

(9 citation statements)

References 31 publications

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“…( Andersen et al, 2020 , Auray et al, 2018 , Carvalho et al, 2020 , D’Acunto et al, 2017 , Farhi and Baqaae, 2020 , Hristov, 2016 , Kollmann et al, 2015 )…”

Section: Uncitated Referencesmentioning

confidence: 99%

Has Germany’s temporary VAT rates cut as part of the COVID-19 fiscal stimulus boosted growth?

Funke

Terasa²

2022

Journal of Policy Modeling

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“…( Andersen et al, 2020 , Auray et al, 2018 , Carvalho et al, 2020 , D’Acunto et al, 2017 , Farhi and Baqaae, 2020 , Hristov, 2016 , Kollmann et al, 2015 )…”

Section: Uncitated Referencesmentioning

confidence: 99%

Has Germany’s temporary VAT rates cut as part of the COVID-19 fiscal stimulus boosted growth?

Funke

Terasa²

2022

Journal of Policy Modeling

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“…For the modelling of the banking sector, we adopt the method as in Gertler and Karadi (2011) and Auray et al (2018), banks first choose the optimum total asset size, and then they choose to invest in different assets : green sector, brown sector, or government bonds.…”

Section: Banksmentioning

confidence: 99%

Build Back Better: The Role of Green Monetary and Fiscal Policies

Benkhodja

Razafindrabe

2022

Preprint

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We establish a two-sector model to simulate the potential effects of green fiscalpolicies and unconventional green monetary policy on the economy during a recoveryor in case of a stimulus policy. We find that instruments such as carbon tax, implicittax on brown loans, and subsidy for the purchase of green goods are all found to bebeneficial to the green sector in contrast to green quantitative easing. The carbon taximposed directly on firms in the brown sector is the most efficient tool to reduce pollution.More importantly, the marginal effects of green instruments on the economydepend on consumer preferences. Namely, the marginal effects are the most prominentwhen consumers start to develop the habit of purchasing green goods. Furthermore,the effects of environmental policies are more efficient when the elasticity of substitutionbetween green and brown goods increases. This finding suggests that raisingconsumers’ awareness and ability to consume green goods reinforce the efficiency ofpublic policies designed for low-carbon transition of the economy.

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“…Farhi and Werning (2017) and Bianchi, Melosi, and Rogantini Picco (2022) examine the role of introducing a national fiscal authority in a monetary union of several countries. More closely related, Auray, Eyquem, and Ma (2018) introduce an asset purchase program into a two-country model of the Eurozone to study responses to a sovereign debt crisis. 6 They find the unconventional monetary policy can stimulate the economy and lower bond yields.…”

Section: Introductionmentioning

confidence: 99%

“…A related literature explores the importance of financial connections and financial participants for the transmission of shocks across countries. SeeKollmann, Enders, and Muller (2011),Kollmann (2013),Dedola, Karadi, and Lombardo (2013),Kirchner and Wijnbergen (2016),Auray, Eyquem, andMa (2018), andKrenz (2022).…”

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confidence: 99%

Unconventional Monetary Policy and Local Fiscal Policy

Bi¹,

Traum²

2022

RWP

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Following the onset of the pandemic, the Federal Reserve employed an unconventional monetary policy that directly intervened in municipal bond markets. We characterize the fiscal and macroeconomic implications of such central bank actions in a New Keynesian model of a monetary union. We assume that state and local governments are subject to a loan-in-advance constraint, reflecting that with lumpy cash flows, they often finance a fraction of expenditures by issuing short-term bonds. The municipal debt is held by financial intermediaries, who also supply credit to the private sector. Direct central bank purchases can transmit to the economy through two main channels: 1) by alleviating cash flow problems of the regional governments and 2) by accelerating lending to the private sector if credit constraints ease more broadly. By quantifying the relative importance of these channels, we highlight that the central bank's actions lead to sizable increases in private investment but have more muted effects on state and local government expenditures. In addition, we also show the transmission of direct federal government aid through intergovernmental transfers is markedly different from unconventional policy.

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Banks, sovereign risk and unconventional monetary policies

Cited by 18 publications

References 31 publications

Has Germany’s temporary VAT rates cut as part of the COVID-19 fiscal stimulus boosted growth?

Has Germany’s temporary VAT rates cut as part of the COVID-19 fiscal stimulus boosted growth?

Build Back Better: The Role of Green Monetary and Fiscal Policies

Unconventional Monetary Policy and Local Fiscal Policy

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