This article shows in a simple monetary model that the learning dynamics do not converge to the rational expectations monetary steady state. This article uses an analytical tractable heterogeneous-agent incomplete-markets (HAIM) model to show that, with no role to play for redistribution, the government bond is more suitable than capital tax for addressing the production inefficiency caused by households’ precautionary savings in the HAIM model.Ĭonvergence to Rational Expectations in Learning Models: A Note of Caution Optimal Capital Taxation and Precautionary Savings The model also explains why it is easier for a central bank to lower inflation than to raise it. This article offers a model that explains how low inflation, low interest rates and high primary budget deficits can coexist. In a policy regime where the fiscal authority is non-Ricardian, an attempt on the part of the central bank to lower inflation may end up backfiring. Some economists have posited that a central bank may not have the power to determine the long-run rate of inflation without fiscal support. Is It Time for Some Unpleasant Monetarist Arithmetic? It finds that while city-level characteristics cannot (robustly) explain variation in the magnitudes of the asymmetries, they do seem to affect the probability that a city experiences asymmetric pass-through. This paper reconsiders the causes of heterogeneous asymmetric pass-through by looking at city-level characteristics.
Moreover, some of this literature has found heterogeneous asymmetry in gas price responses across cities. It also finds a modest impact of diversifying or renationalizing global value chains in mitigating the economy’s exposure to foreign shocks.Ī large literature has argued that gasoline prices respond more rapidly to increases in oil prices than to decreases in oil prices. It finds that such chains played a significant role in the decline of output and employment across U.S.
This article investigates the role of global value chains in the declines of manufacturing employment and output in the U.S. Louis Fed has recently produced that you may have missed. Today, we are highlighting some research the St.
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