Output Gap In Presence Of Financial Frictions And Monetary Policy Trade Offs

Output Gap in Presence of Financial Frictions and Monetary Policy Trade offs PDF
Author: Francesco Furlanetto
Publisher: International Monetary Fund
Category : Business & Economics
Languages : en
Pages : 44
View: 2737

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Book Description:
The recent global financial crisis illustrates that financial frictions are a significant source of volatility in the economy. This paper investigates monetary policy stabilization in an environment where financial frictions are a relevant source of macroeconomic fluctuation. We derive a measure of output gap that accounts for frictions in financial market. Furthermore we illustrate that, in the presence of financial frictions, a benevolent central bank faces a substantial trade-off between nominal and real stabilization; optimal monetary policy significantly reduces fluctuations in price and wage inflations but fails to alleviate the output gap volatility. This suggests a role for macroprudential policies.


Research Bulletin March 2015

Research Bulletin  March 2015 PDF
Author: International Monetary Fund. Research Dept.
Publisher: International Monetary Fund
Category : Business & Economics
Languages : en
Pages : 16
View: 6266

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Book Description:
Articles in the March 2015 Research Bulletin focus on the oil market, energy subsidies, and output. The Research Summary on "An Exploration in Deep Corners of the Oil Market," authored by Rabah Arezki, Douglas Laxton, Armen Nurekyan, and Hou Wang, examines fluctuations in oil prices. "The State Budget May Afford It All," by Christian Ebeke and Constant Lonkeng Ngbouana, reviews energy subsidies and their fiscal, distributional, and environmental costs. In the “Q&A” column Pau Rabanal takes a look at “Seven Questions on Potential Output.” The Bulletin includes a listing of recent IMF Working Papers, Staff Discussion Notes, recommended readings from IMF Publications, and a call for papers for the next Annual Research Conference. A link with information and free access to IMF Economic Review is also included.


Russian Federation

Russian Federation PDF
Author: International Monetary Fund. European Dept.
Publisher: International Monetary Fund
Category : Business & Economics
Languages : en
Pages : 94
View: 5002

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Book Description:
Russian Federation: Selected Issues


The Science And Practice Of Monetary Policy Today

The Science and Practice of Monetary Policy Today PDF
Author: Volker Wieland
Publisher: Springer Science & Business Media
Category : Business & Economics
Languages : en
Pages : 145
View: 6468

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Book Description:
Bridging the theory and practice of monetary policy, this book presents aspects of the New-Keynesian theory of monetary policy and its implications for the practical decision-making of central bankers. It also outlines important lessons for policymakers.


Asset Prices And Monetary Policy

Asset Prices and Monetary Policy PDF
Author: John Y. Campbell
Publisher: University of Chicago Press
Category : Business & Economics
Languages : en
Pages : 392
View: 1573

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Book Description:
Economic growth, low inflation, and financial stability are among the most important goals of policy makers, and central banks such as the Federal Reserve are key institutions for achieving these goals. In Asset Prices and Monetary Policy, leading scholars and practitioners probe the interaction of central banks, asset markets, and the general economy to forge a new understanding of the challenges facing policy makers as they manage an increasingly complex economic system. The contributors examine how central bankers determine their policy prescriptions with reference to the fluctuating housing market, the balance of debt and credit, changing beliefs of investors, the level of commodity prices, and other factors. At a time when the public has never been more involved in stocks, retirement funds, and real estate investment, this insightful book will be useful to all those concerned with the current state of the economy.


Annual Report

Annual Report PDF
Author: Federal Reserve Bank of Dallas
Publisher:
Category :
Languages : en
Pages :
View: 4411

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Asset Prices And Monetary Policy

Asset Prices and Monetary Policy PDF
Author: Ichiro Fukunaga
Publisher:
Category : Assets (Accounting)
Languages : en
Pages : 35
View: 4808

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Book Description:
How should central banks take into account movements in asset prices in the conduct of monetary policy? We provide an analysis to address this issue using a dynamic stochastic general equilibrium model incorporating both price rigidities and financial market imperfections. Our findings are twofold. First, in the presence of these two sources of distortion in the economy, central banks face a policy tradeoff between stabilizing inflation and the output gap. With this tradeoff, central banks could strike a better balance between both objectives if they took variables other than inflation, such as asset prices, into consideration. Second, these benefits decrease when central banks rely on limited information about the underlying sources of asset price movements and cannot judge which part of the observed asset price movements reflects inefficiencies in the economy.--Author's abstract.


Expectations Asset Prices And Monetary Policy

Expectations  Asset Prices  and Monetary Policy PDF
Author: Simon Gilchrist
Publisher:
Category : Asset allocation
Languages : en
Pages : 72
View: 6130

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Book Description:
This paper studies the implications of financial market imperfections represented by a countercyclical external finance premium and the gradual recognition of changes in the drift of technology growth for the design of an interest rate rule. Asset price movements induced by changes in trend growth influence balance-sheet conditions that determine the external finance premium. Such movements are magnified when the private sector is imperfectly informed regarding the trend growth rate of technology. The presence of financial market imperfections provides a motivation for responding to the gap between the observed asset prices and the potential level of asset prices in addition to responding strongly to inflation. This is because the asset price gap represents distortions in the resource allocation induced by financial market imperfections more distinctly than inflation . The policymaker's imperfect information about the drift of technology growth renders imprecise the calculation of potential and thus reduces the benefit of responding to the asset price gap. A policy that responds to the level of asset prices which does not take into account changes in potential tends to be welfare reducing.--Publisher's description.