Download or read book Essays on Dynamic Optimal Fiscal and Monetary Policy written by Kevin Joseph Lansing and published by . This book was released on 1993 with total page 414 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on the Dynamic Effects of Monetary and Fiscal Policy written by George Themistocles Kanaginis and published by . This book was released on 1991 with total page 202 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Dynamic Implications of Fiscal and Monetary Policies in Small Open Economies written by Amartya Lahiri and published by . This book was released on 1995 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Monetary and Fiscal Policy Interactions in Small Open Economies written by Thitima Chucherd and published by . This book was released on 2013 with total page 474 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis addresses interactions between monetary and fiscal policies in a theoretical dynamic stochastic general equilibrium (DSGE) model of a small open economy and in an empirical model under a structural vector error correction model (SVECM). The thesis consists of three essays. The contribution is both theoretical and empirical that enables a better understanding of the complexity of interactions between monetary and fiscal policies in small open economies. The first essay examines the equilibrium determinacy under monetary and fiscal rules. The goal is to investigate how monetary and fiscal policy interactions ensure a unique and non-explosive (determinate) equilibrium for a small open economy. The study focuses when policy makers implement a set of policy mixes to address domestic output price inflation control for monetary policy, debt stabilization for fiscal policy, and joint output stabilization tasks. The result indicates that two policy schemes facilitate a determinate equilibrium. First, monetary policy actively controls inflation when fiscal policy sets a sufficient feedback on debt. Second, monetary policy becomes passive against inflation when fiscal policy is insolvent. Adding output stabilization to each rule simply causes variants of this fundamental. An interest rate rule with output stabilization can be more passive against inflation while providing a stronger response to the output gap. Fiscal policy is required to set higher feedback on debt along with its stronger counter-cyclical policy. The second essay links between the equilibrium determinacy and policy optimization. This essay provides insights into the design of policy mixes and compares determinacy outcomes between two theoretical models of a small open economy: with and without an explicit exchange rate role. This study shows that policy interactions in a small open economy with an endogenous exchange rate is quite sophisticated, especially when a monetary rule is added with an output stabilization task and/or targeted to Consumer Price Index (CPI) inflation. Additional concern for monetary policy in an open economy causes a partial offset to its reaction on domestic output price inflation that weakens its effect on the real debt burden. To minimize economic fluctuations, policy makers should mute the role of output stabilization for monetary policy, and set minimum feedback on debt that is compatible with the degree of counter-cyclical fiscal policy. Substantially active response to inflation is satisfactory for monetary policy with CPI inflation targeting. The third essay empirically presents monetary and fiscal policy interactions in Thailand's SVECM suggested by a theoretical DSGE model developed from the previous essays. This essay shows that the DSGE-SVECM model can be supported by Thai data. A shock to monetary policy is effective with a lag. Government spending policy is also effective with a lag and some crowding-out effects on output. An adverse shock in tax policy unexpectedly stimulates the economy, indicating room for enhancing economic growth by relaxing revenue constraint. Monetary policy is mainly implemented to correct a consequence of a fiscal shock on inflation (and also the domestic and foreign shocks), while fiscal policy appears to counter a consequence of the monetary policy shock on output.

Download or read book Essays in Dynamic Fiscal and Monetary Policy written by Mikhail Golosov and published by . This book was released on 2004 with total page 458 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Optimal Monetary and Fiscal Policy in Dynamic Economies written by Arturo Antón and published by . This book was released on 2002 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Public Finance and Stabilization Policy written by Richard Abel Musgrave and published by . This book was released on 1974 with total page 392 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Monetary and Fiscal Policy written by Choongryul Yang and published by . This book was released on 2020 with total page 392 pages. Available in PDF, EPUB and Kindle. Book excerpt: My dissertation investigates the transmission of monetary and fiscal policy using both empirical and theoretical frameworks. Chapter 1 examines how the number of products sold by a firm affect its decisions regarding price setting and information acquisition. Using a firm-level survey from New Zealand, I show that firms that produce more goods have both better information about aggregate inflation and more frequent but smaller price changes. To characterize the implications of these empirical findings for the ability of monetary policy to stimulate the economy, I develop a new dynamic general equilibrium model with rationally inattentive multi-product firms that pay a menu cost to reset their prices. I show that the interaction of the menu cost and rational inattention frictions leads firms to adopt a wait-and-see policy and gives rise to a new selection effect: firms have time-varying inaction bands widened by their subjective uncertainty about the economy such that price adjusters choose to be better informed than non-adjusters. This selection effect endogenously generates a distribution of desired price changes with a majority near zero and some very far from zero, which acts as a strong force to amplify monetary non-neutrality. I calibrate the model to be consistent with the micro-evidence on both prices and inattention and find two main quantitative results. First, the new selection effect, coupled with imperfect information of price setters, leads to real effects of monetary policy shocks in the one-good version of the model that are nearly as large as those in the Calvo model. Second, in the two-good version of the model, as firms optimally choose to have better information about monetary shocks, the real effects of monetary policy shocks decline by 20%. In Chapter 2, joint with Hassan Afrouzi, we develop a general equilibrium flexible price model with dynamic rational inattention in which the slope of the Phillips curve is endogenous to systematic aspects of monetary policy. This Phillips curve is flatter when the monetary policy is more hawkish: rationally inattentive firms find it optimal to ignore monetary policy shocks when the monetary authority commits to stabilize nominal variables. Moreover, an unexpectedly more dovish monetary policy leads to a completely flat Phillips curve in the short-run and a steeper Phillips curve in the long-run. We also develop a tractable method for solving general dynamic rational inattention models in linear quadratic Gaussian setups. Chapter 3 asks whether the effectiveness of fiscal stimulus policy depends on the degree of economic income inequality. Many previous works about state-dependence of fiscal multiplier have focused on the degree of slack in the economy. In a surge of concerns about rising inequality of the U.S., I use rich historical state-level data on military procurement and inequality to find the relationship between the degree of income inequality and the local government spending multipliers. I show that the effects of government spending shocks on output are larger in low-inequality states than in high-inequality states. In contrast, I find no evidence that employment multipliers differ by the extent of income inequality. These results are robust to various specifications and other sources of inequality data. I also estimate aggregate output multipliers using historical military spending and income inequality data. I find the evidence that aggregate output multipliers are high when the income inequality is low. Thus, both local and aggregate multipliers are significantly affected by the degree of income inequality of an economy. I consider a variety of potential theoretical explanations for the results, including heterogeneous within-sector inequality and distributional effects of government spending shock, but find that none can adequately explain this finding

Download or read book Essays on Dynamic Fiscal Policy and Market Efficiency written by Maria I. Marika Santoro and published by . This book was released on 2004 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on the effects of fiscal and monetary policy written by Jesper Lindé and published by . This book was released on 1999 with total page 139 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Dynamic Macroeconomics and Monetary Policy written by Jiao Wang and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis investigates monetary policy within the New Keynesian framework in dynamic macroeconomics. It includes three original research papers. The first paper examines the rules and transmission mechanisms of monetary policy in one of the fast growing economies in the 21st century, China, by extending a standard New Keynesian dynamic stochastic general equilibrium model with financial frictions and investment-specific shocks in order to capture some of the Chinese characteristics and applying a Bayesian estimation strategy to real-time data. It offers a new way of empirically examining the rule of China's monetary policy and indicates a structural break of the neutral technology development that may have caused the slowing down of GDP growth since 2010. The second paper revisits optimal monetary policy in open economies, in particular, focusing on the noncooperative policy game under local currency pricing in a theoretical two-country dynamic stochastic general equilibrium model. Quadratic loss functions of noncooperative policy makers and welfare gains from cooperation are obtained in the paper. The results show that noncooperative policy makers face extra trade-offs regarding stabilizing the real marginal costs induced by deviations from the law of one price under local currency pricing. As a result of the increased number of stabilizing objectives, welfare gains from cooperation emerge even when two countries face only technology shocks, which usually leads to equivalence between cooperation and noncooperation. Still, gains from cooperation are not large, implying that frictions other than nominal rigidities are necessary to strongly recommend cooperation as an important policy framework to increase global welfare. The third paper focuses on the noncooperative policy game specified by choice of policy instrument for implementing optimal monetary policy in a two-country open economy model similar to the one in the second paper. It examines four options of policy instruments including the producer price index inflation rate, the consumer price index inflation rate, the import price inflation rate and the nominal interest rate. It shows that choosing different policy instruments generally leads to different equilibria and, in particular, choosing the nominal interest rate results in equilibrium indeterminacy. In addition, the welfare ranking of these policy instruments depends on a country's degree of openness which is measured as the weight assigned to imported goods in the consumers' utility function. In less open countries, domestically produced goods carry a relatively higher weight in the consumers' utility function. For these less open countries, choosing the producer price index inflation rate induces a larger welfare cost from noncooperation than choosing the consumer price index inflation rate would. Choosing the consumer price index inflation rate in turn causes a larger welfare cost than choosing the import price inflation rate. Conversely, the reverse is true when countries are more open. This result sheds light on the important role that policy instrument choice plays in determining the equilibrium outcomes, to which policy makers should pay special attention when implementing optimal monetary policy under noncooperation.

Download or read book Three Essays in Macroeconomics of Fiscal and Monetary Policies written by and published by . This book was released on 2015 with total page 102 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Topical Comment written by Roy Harrod and published by New York : St. Martin's Press. This book was released on 1961 with total page 282 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Inflation Dynamics and Monetary Policy in a Globalized World written by Muhammad Naveed Tahir and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The aim of this thesis is to analyze the impact of globalization on the dynamics of inflation and monetary policy in a globalized world. It consists of three essays.In the first essay we investigate the impact of financial globalization on the behaviour of inflation targeting emerging market economies with respect to exchange rate - Do central banks respond to exchange rate movements or not? We use quarterly data for six emerging market inflation targeting economies from the date of their inflation targeting adoption to 2009 Q4. The chapter uses small open economy new Keynesian model à la Gali and Monacelli (2005), and employs multi-equation GMM technique to investigate the relationship. We find that the response of central bank to the exchange rate in case of Brazil, Chile, Mexico and Thailand is statistically significant while insignificant for Korea and Czech Republic. Theoretically, it should not be so as even under flexible inflation targeting central bank responds to inflation deviation and output gap; we think that the peculiar characteristics of emerging markets, like fear of floating, weak financial system and low level of central bank credibility make exchange rate important for these economies. In the second essay we investigate empirically the relative importance of monetary transmission channels for Brazil, Chile and Korea. This chapter uses monthly data from the inception of inflation targeting regime to 2009 M12. We use a SVAR model incorporating the main monetary transmission channels combined together instead of individual channels in isolation. The empirical results indicate that the exchange rate channel and the share price channel have higher relative importance than the traditional interest rate and credit channel for industrial production. The results are not much different in case of inflation, except for Korea. The high ranking of exchange rate and share price channel is in line with the results by Gudmundsson (2007), which finds that exchange rate channel might have overburdened in the wake of financial globalization.In the third chapter we investigate empirically the role of openness - real and financial - on the inflation dynamics of Brazil, Chile and Korea. The chapter uses monthly data from the inception of inflation targeting regime to the end month of 2009. In this chapter we employ the Generalized Method of Moments (GMM) technique. We use imports to GDP ratio as an indicator for real openness whereas Chinn and Ito index (KAOPEN) and total assets plus total liabilities to GDP ratio form the data set of Lane and Milesi-Ferretti are two proxies for financial openness. The chapter concludes that there exists, generally, a positive relationship between real openness and inflation. However, in case of financial globalization the results are inconclusive as they are sensitive to measurement method of financial globalization.

Download or read book Essays on the State Dependent Effects of Monetary Policy and Fiscal Policy written by Cheng Zhou and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation analyzes the effects of monetary policy and fiscal policy from a state-dependent perspective. The first chapter is on the dynamic effect of monetary policy on asset price. Employing a two-state threshold local projection method, we find that when the Fed increases the Federal Funds rate, the stock price decreases in normal times, but increases during bubbly episodes. We allow time-varying risk premium and show that this result is driven by both the asymmetric effects on fundamentals and the existence of bubbles. Moreover, the paper captures the effect of an exogenous tightening monetary shock on stock prices as an increasing function of the size of bubbles, using a flexible semiparametric varying-coefficient model specification. The state-dependent evidence is more informative in measuring monetary policy effects than linear or time-varying methods, and is also robust to different identification schemes and various definitions of bubbles. This paper points out two important transmission channels of monetary policy on asset price: risk premium and asset bubbles, which are often ignored in theoretical models. On the policy side, our empirical analysis suggests that central banks should be cautious about adopting "leaning against bubble" monetary policies when the bubble size is relatively large. Another contribution is that we propose a novel empirical framework to study generalized state-dependent impulse response functions, a methodology which should have many applications in macroeconomics. The second chapter uses more than one hundred years of US historical data to examine the fiscal multiplier and how it may differ during different economic conditions. Using the flexible semiparametric varying coefficient method in the framework of local projections, we directly model the fiscal multiplier as a function of various state variables. The paper shows that the U.S. fiscal multiplier is slightly below one and approximately the same, during periods of slack as compared to normal times. Our results suggest that fiscal policy was not necessarily a more powerful tool to stimulate aggregate demand during the "Great Recession". The electronic version of this dissertation is accessible from http://hdl.handle.net/1969.1/155721

Download or read book Essays in Macroeconomic Theory written by Antoine Camous and published by . This book was released on 2015 with total page 114 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis investigates the design of appropriate institutions to ensure the good conduct of fiscal and monetary policy. The three chapters develop theoretical frameworks to address the time-inconsistency of policy plans or prevent the occurrence of self-fulfilling prophecies. Time-inconsistency refers to a situation where preferences over policy change over time. Optimal policy plans are not credible, since agents anticipate the implementation of another policy in the future. This issue is particularly pervasive to monetary policy, since nominal quantities (price level, interest rates, etc.) are very sensitive to expected policies, but predetermined to actual policy choices. The first chapter investigates how fiscal policy can mitigate the inflation bias of monetary policy in an economy with heterogeneous agents. Whenever there is a desire for redistribution, progressive fiscal helps to implement a policy mix less biased toward inflation. Importantly, even the richest supports some fiscal progressivity, since over their life cycle, they benefit from a more balanced policy-mix. A self-fulfilling prophecy, or coordination failure, refers to a situation where a more desirable economic outcome could be reached, but fail to be, by the only effect of pessimistic expectations. Self-fulfilling debt crises are a classical example: pessimistic investors bid down the price of debt, which increases the likelihood of default, which in turn justifies the initial decrease in price. The second chapter, co-authored with Russell Cooper, asks whether monetary policy can deter self-fulfilling debt crises. The analysis shows how a counter-cyclical inflation policy with commitment is effective in doing so. Importantly, it can be implemented without endangering the primary objective of monetary policy, to deliver an inflation target for instance. The third chapter, co-authored with Andrew Gimber, revisits the classic Laffer curve coordination failure: taxes could be low, but they are high because agents anticipate high tax rates. In a dynamic environment with debt issuance, the multiplicity of equilibria critically depends on inherited debt. At high levels of public debt, fiscal policy is pro-cyclical: taxes increase when output decreases, and self-fulfilling fiscal crisis can occur. Overall, this chapter sheds light on the perils of high level of public debt.

Download or read book The Effectiveness of Fiscal Policy in Stimulating Economic Activity written by Richard Hemming and published by International Monetary Fund. This book was released on 2002-12 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews the theoretical and empirical literature on the effectiveness of fiscal policy. The focus is on the size of fiscal multipliers, and on the possibility that multipliers can turn negative (i.e., that fiscal contractions can be expansionary). The paper concludes that fiscal multipliers are overwhelmingly positive but small. However, there is some evidence of negative fiscal multipliers.