Download or read book Secular Drivers of the Natural Rate of Interest in the United States A Quantitative Evaluation written by Josef Platzer and published by International Monetary Fund. This book was released on 2022-02-11 with total page 88 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a heterogeneous agent, overlapping generations model with nonhomothetic preferences that nests several explanations for the decline in the natural rate of interest (r∗) suggested in the literature: demographic change, a slowdown in productivity growth, a rise in income inequality, and public policy. The model can account for a 2.2 percentage point (pp) decline in r∗ between 1975 and 2015, which is within the range of empirical estimates. Rising income inequality is an important driver (-0.70 pp), and together with demographic change (-0.71 pp) and the slowdown in productivity growth (-1.0 pp) explains most of the decline. Growing public debt is the major counteracting force (+0.31 pp). Permanent income inequality is of greater importance than inequality due to uninsurable income risk, and matching the degree of nonhomotheticity in consumption and savings behavior to empirical estimates is essential for this result. We predict that r∗ will reach a low of 0.38% by 2030, after which a slow reversal will begin. The natural rate will stabilize at 1% in the long run, a low level when compared with the postwar path of r∗ implied by the model. This remains true even if we take into account soaring public debt levels due to the COVID-19 pandemic. Policy can have considerable impact on the level of r∗ through the tax and transfer system.
Download or read book Hysteresis and Business Cycles written by Ms.Valerie Cerra and published by International Monetary Fund. This book was released on 2020-05-29 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.
Download or read book Fiscal Policy in a Turbulent Era written by Enrique Alberola and published by Edward Elgar Publishing. This book was released on 2024-02-12 with total page 253 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recognising the regained importance of fiscal policy over the last two decades, this timely book provides much-needed insight into the changing practice of fiscal policy and how it is adapting to the unpredictable nature of the 21st century. Expert academic and practitioner contributors consider the resources which underpin current fiscal policy, assessing its overall effectiveness before outlining the changing priorities –ageing, inequality, climate change- and the financial tools available, and considering the future of fiscal policy in uncertain times.
Download or read book Financing Investment in Times of High Public Debt written by Floriana Cerniglia and published by Open Book Publishers. This book was released on 2023-12-12 with total page 188 pages. Available in PDF, EPUB and Kindle. Book excerpt: The fourth book in the ‘European Public Investment Outlook’ series focuses on the urgent issue of how to finance needed investment in critical tangible and intangible infrastructure given high levels of public debt, a thorny problem facing many governments across Europe. Drawing on expertise from academics, researchers at public policy institutes and international governance bodies, the contributors analyse the current situation and prospects and propose feasible solutions. Financing Investment in Times of High Public Debt offers a powerful combination of high-level analysis of cross-continental policies and trends, with close examination of specific contexts in France, Italy, Germany and Spain. The chapters in Part II explore challenges including how to finance climate investments, the extent to which national promotional banks can offer solutions, EU budget reform and recent trends in tax progressivity. This book is essential reading for economists, policymakers, and anyone interested in implementing and financing public policy in Europe and wanting to better understand the intricacies of EU governance and institutions.
Download or read book Fiscal R Star Fiscal Monetary Tensions and Implications for Policy written by Marijn A. Bolhuis and published by International Monetary Fund. This book was released on 2024-08-09 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the Global Financial Crisis, fiscal policy in advanced economies has become more “active” – that is, increasingly unresponsive to rising debt levels. This paper explores tensions between active fiscal and monetary policies by introducing the concept of “fiscal r-star,” which is the real interest rate required to stabilize debt levels when the primary balance is set exogenously, output is growing at potential, and inflation is at target. It is proposed that the difference between monetary r-star and fiscal r-star—referred to as the “fiscal monetary gap”—is a proxy for fiscal-monetary policy tensions. An analysis of over 140 years of data from 16 advanced economies shows that larger fiscal-monetary gaps are associated with rising debt levels, higher inflation, financial repression, lower real returns on bonds and cash, with elevated risks of future debt, inflation, currency, housing, and systemic crises. Current estimates indicate that fiscal-monetary tensions are at historic highs. Given the tepid growth outlook, growth-enhancing reforms and fiscal consolidation, among other policy adjustments, may be needed to attenuate fiscal-monetary tensions over time.
Download or read book Demographics and the Natural Rate of Interest in Japan written by Mr.Fei Han and published by International Monetary Fund. This book was released on 2019-02-15 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: Japan’s aging and shrinking population could lower the natural rate of interest and, together with low inflation expectations, challenge the Bank of Japan’s efforts to reflate the economy. This paper uses a semi-structural model to estimate the impact of demographics on the natural rate in Japan. We find that demographic change has a significantly negative impact on the natural rate by lowering trend potential growth. We also find that the negative impact has been increasing over time amid stronger demographic headwinds. These findings highlight the importance of boosting potential growth to offset the negative demographic impact and lift the natural rate in Japan.
Download or read book Negative Interest Rate Policy NIRP written by Andreas Jobst and published by International Monetary Fund. This book was released on 2016-08-10 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: More than two years ago the European Central Bank (ECB) adopted a negative interest rate policy (NIRP) to achieve its price stability objective. Negative interest rates have so far supported easier financial conditions and contributed to a modest expansion in credit, demonstrating that the zero lower bound is less binding than previously thought. However, interest rate cuts also weigh on bank profitability. Substantial rate cuts may at some point outweigh the benefits from higher asset values and stronger aggregate demand. Further monetary accommodation may need to rely more on credit easing and an expansion of the ECB’s balance sheet rather than substantial additional reductions in the policy rate.
Download or read book Global Waves of Debt written by M. Ayhan Kose and published by World Bank Publications. This book was released on 2021-03-03 with total page 403 pages. Available in PDF, EPUB and Kindle. Book excerpt: The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.
Download or read book World Economic Outlook October 2023 written by International Monetary Fund. Research Dept. and published by International Monetary Fund. This book was released on 2023-10-10 with total page 182 pages. Available in PDF, EPUB and Kindle. Book excerpt: The latest World Economic Outlook reports signs that policy tightening is starting to cool activity despite core inflation proving persistent. Risks are more balanced as banking sector stress has receded, but they remain tilted to the downside. Monetary policy should stay the course to bring inflation to target, while fiscal consolidation is needed to tackle soaring debts. Structural reforms are crucial to revive medium-term growth prospects amid constrained policy space.
Download or read book Research Handbook on Central Banking written by Peter Conti-Brown and published by Edward Elgar Publishing. This book was released on with total page 589 pages. Available in PDF, EPUB and Kindle. Book excerpt: Central banks occupy a unique space in their national governments and in the global economy. The study of central banking however, has too often been dominated by an abstract theoretical approach that fails to grasp central banks’ institutional nuances. This comprehensive and insightful Handbook, takes a wider angle on central banks and central banking, focusing on the institutions of central banking. By 'institutions', Peter Conti-Brown and Rosa Lastra refer to the laws, traditions, norms, and rules used to structure central bank organisations. The Research Handbook on Central Banking’s institutional approach is one of the most interdisciplinary efforts to consider its topic, and includes chapters from leading and rising central bankers, economists, lawyers, legal scholars, political scientists, historians, and others.
Download or read book Economic Security Neglected Dimension of National Security written by National Defense University (U S ) and published by Government Printing Office. This book was released on 2011-12-27 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt: On August 24-25, 2010, the National Defense University held a conference titled “Economic Security: Neglected Dimension of National Security?” to explore the economic element of national power. This special collection of selected papers from the conference represents the view of several keynote speakers and participants in six panel discussions. It explores the complexity surrounding this subject and examines the major elements that, interacting as a system, define the economic component of national security.
Download or read book Inflation Expectations written by Peter J. N. Sinclair and published by Routledge. This book was released on 2009-12-16 with total page 402 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inflation is regarded by the many as a menace that damages business and can only make life worse for households. Keeping it low depends critically on ensuring that firms and workers expect it to be low. So expectations of inflation are a key influence on national economic welfare. This collection pulls together a galaxy of world experts (including Roy Batchelor, Richard Curtin and Staffan Linden) on inflation expectations to debate different aspects of the issues involved. The main focus of the volume is on likely inflation developments. A number of factors have led practitioners and academic observers of monetary policy to place increasing emphasis recently on inflation expectations. One is the spread of inflation targeting, invented in New Zealand over 15 years ago, but now encompassing many important economies including Brazil, Canada, Israel and Great Britain. Even more significantly, the European Central Bank, the Bank of Japan and the United States Federal Bank are the leading members of another group of monetary institutions all considering or implementing moves in the same direction. A second is the large reduction in actual inflation that has been observed in most countries over the past decade or so. These considerations underscore the critical – and largely underrecognized - importance of inflation expectations. They emphasize the importance of the issues, and the great need for a volume that offers a clear, systematic treatment of them. This book, under the steely editorship of Peter Sinclair, should prove very important for policy makers and monetary economists alike.
Download or read book World Economic Outlook April 2016 written by International Monetary Fund. Research Dept. and published by International Monetary Fund. This book was released on 2016-04-12 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt: Major macroeconomic realignments are affecting prospects differentially across the world’s countries and regions. The April 2016 WEO examines the causes and implications of these realignments—including the slowdown and rebalancing in China, a further decline in commodity prices, a related slowdown in investment and trade, and declining capital flows to emerging market and developing economies—which are generating substantial uncertainty and affecting the outlook for the global economy. Additionally, analytical chapters examine the slowdown in capital flows to emerging market economies since their 2010 peak—its main characteristics, how it compares with past slowdowns, the factors that are driving it, and whether exchange rate flexibility has changed the dynamics of the capital inflow cycle—and assess whether product and labor market reforms can improve the economic outlook in advanced economies, looking at the recent evolution and scope for further reform, the channels through which reforms affect economic activity under strong versus weak economic conditions, reforms’ short- to medium-term macroeconomic effects, and sequencing of reforms and coordination with other policies to maximize their potential quantitative economic benefits. A special feature analyzes in depth the energy transition in an era of low fossil fuel prices.
Download or read book The Dot com Bubble the Bush Deficits and the U S Current Account written by Aart Kraay and published by World Bank Publications. This book was released on 2005 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: The authors challenge this view here and develop two alternative interpretations. Both are based on the notion that a bubble (the "dot-com" bubble) has been driving the stock market, but differ in their assumptions about the interactions between this bubble and fiscal policy (the "Bush" deficits). The "benevolent" view holds that a change in investor sentiment led to the collapse of the dot-com bubble and the Bush deficits were a welfare-improving policy response to this event. The "cynical" view holds instead that the Bush deficits led to the collapse of the dot-com bubble as the new administration tried to appropriate rents from foreign investors. The authors discuss the implications of each of these views for the future evolution of the U.S. economy and, in particular, its net foreign asset position."
Download or read book Lower for Longer written by Mr.Andrea Pescatori and published by International Monetary Fund. This book was released on 2015-06-24 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: We use a semi structural model to estimate neutral rates in the United States. Our Bayesian estimation incorporates prior information on the output gap and potential output (based on a production function approach) and accounts for unconventional monetary policies at the ZLB by using estimates of “shadow” policy rates. We find that our approach provides more plausible results than standard maximum likelihood estimates for the unobserved variables in the model. Results show a significant trend decline in the neutral real rate over time, driven only in part by a decline in potential growth whereas other factors (including excess global savings) matter. Neutral rates likely turned negative during the Global Financial Crisis and are expected to increase only gradually looking forward.
Download or read book Secular Cycles written by Peter Turchin and published by Princeton University Press. This book was released on 2009-08-09 with total page 361 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Secular Cycles elaborates and expands upon the demographic-structural theory first advanced by Jack Goldstone, which provides an explanation of long-term oscillations. This book tests that theory's specific and quantitative predictions by tracing the dynamics of population numbers, prices and real wages, elite numbers and incomes, state finances, and sociopolitical instability. Turchin and Nefedov study societies in England, France, and Russia during the medieval and early modern periods, and look back at the Roman Republic and Empire. Incorporating theoretical and quantitative history, the authors examine a specific model of historical change and, more generally, investigate the utility of the dynamical systems approach in historical applications."--BOOK JACKET.
Download or read book Global Climate Change Impacts in the United States written by U.S. Global Change Research Program and published by Cambridge University Press. This book was released on 2009-08-24 with total page 193 pages. Available in PDF, EPUB and Kindle. Book excerpt: Summarizes the science of climate change and impacts on the United States, for the public and policymakers.
