Optimal Monetary Policy at the Zero Lower Bound

Azariadis, Costas; Bullard, James B.; Singh, Aarti; Suda, Jacek

doi:10.2139/ssrn.2646149

Cited by 6 publications

(6 citation statements)

References 35 publications

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“…A second branch of this literature investigates the existence of non-fundamental equilibria in overlapping generations models. A non-exhaustive list of papers, following Tirole's seminal contribution (Tirole, 1985), would include Martin andVentura (2011, 2012), , , and Azariadis et al (2015). The model we develop in this paper contains what Tirole would call 'bubbly equilibria', but unlike these papers, we develop our argument in the context of a complete markets overlapping generations model without the credit constraints introduced by these authors.…”

Section: The Relationship Of Our Work To Previous Literaturementioning

confidence: 99%

A Requiem for the Fiscal Theory of the Price Level

Farmer¹,

Zabczyk²

2019

IMF Working Papers

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The Fiscal Theory of the Price Level (FTPL) is the claim that, in a popular class of theoretical models, the price level is sometimes determined by fiscal policy rather than monetary policy. The models where this claim has been established assume that all decisions are made by an infinitely-lived representative agent. We present an alternative, arguably more realistic model, populated by sixty-two generations of people. We calibrate our model to an income profile from U.S. data and we show that the FTPL breaks down. In our model, the price level and the real interest rate are indeterminate, even when monetary and fiscal policy are both active. Our findings challenge established views about what constitutes a good combination of fiscal and monetary policies.

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Section: The Relationship Of Our Work To Previous Literaturementioning

confidence: 99%

A Requiem for the Fiscal Theory of the Price Level

Farmer¹,

Zabczyk²

2019

IMF Working Papers

View full text Add to dashboard Cite

show abstract

“…A second branch of this literature investigates the existence of non-fundamental equilibria in overlapping generations models. A non-exhaustive list of papers, following Tirole's seminal contribution (Tirole, 1985), would include Martin andVentura (2011, 2012), , and Azariadis et al (2015). The model we develop in this paper contains what Tirole would call 'bubbly equilibria' but, unlike these papers, we develop 7 Importantly, the Aiyagari (1985) result requires the endowments of agents to be bounded away from zero.…”

Section: The Relationship Of Our Work To Previous Literaturementioning

confidence: 99%

A Requiem for the Fiscal Theory of the Price Level

Farmer

Zabczyk

2019

SSRN Journal

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their comments and suggestions. Any remaining errors are ours. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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“…See Azariadis, Bullard, Singh and Suda (2015) for an analysis of the zero lower bound problem in an incomplete-markets economy with cash.…”

Section: Balance-sheet Policiesmentioning

confidence: 99%

Conventional and unconventional monetary policy rules

Sheedy

2017

Journal of Macroeconomics

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This essay examines the challenges in devising rules for unconventional monetary policy suitable for a post-crisis world. It is argued that unconventional monetary policy instruments are a poor substitute for conventional interest-rate policy in stabilizing the economy and in insulating monetary policy from political pressures. Some suggestions for the reform of inflation targeting are made to reduce the need for unconventional policy instruments in the future.JEL classifications: E44; E52; E58.

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Optimal Monetary Policy at the Zero Lower Bound

Cited by 6 publications

References 35 publications

A Requiem for the Fiscal Theory of the Price Level

A Requiem for the Fiscal Theory of the Price Level

A Requiem for the Fiscal Theory of the Price Level

Conventional and unconventional monetary policy rules

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