Liquidity Traps and Monetary Policy: Managing a Credit Crunch
... One attractive feature of the financial sector model we use is that, if the shock to the collateral constraint that causes the recession is sufficiently large, the equilibrium real interest rate becomes negative for several periods.4 The reason is that savings must be reallocated to lower productiv ...
... One attractive feature of the financial sector model we use is that, if the shock to the collateral constraint that causes the recession is sufficiently large, the equilibrium real interest rate becomes negative for several periods.4 The reason is that savings must be reallocated to lower productiv ...
spd04 Hughes-Hallett-k 225546 en
... and social equity. In essence, it proved too difficult to turn fiscal policy on and off sufficiently fast and to pre-commit to certain expenditure and taxation plans at the same time. Valiant attempts to do so, in the form of imposing longer run goals and greater coherence on the Treasury’s policy m ...
... and social equity. In essence, it proved too difficult to turn fiscal policy on and off sufficiently fast and to pre-commit to certain expenditure and taxation plans at the same time. Valiant attempts to do so, in the form of imposing longer run goals and greater coherence on the Treasury’s policy m ...
AP Macro Practice Quiz Questions 28, 29, 30
... Which list contains only actions that decrease the money supply? a. raise the discount rate, make open market purchases b. raise the discount rate, make open market sales c. lower the discount rate, make open market purchases d. lower the discount rate, make open market sales If reserve requirements ...
... Which list contains only actions that decrease the money supply? a. raise the discount rate, make open market purchases b. raise the discount rate, make open market sales c. lower the discount rate, make open market purchases d. lower the discount rate, make open market sales If reserve requirements ...
File
... What matters to people is the real value of money or income—its purchasing power—not the face value of money or income. As long as the Fed allows the supply of money to increase by 5 percent—the same amount as inflation— the demand for money and its supply will both grow at the same rate. Because mo ...
... What matters to people is the real value of money or income—its purchasing power—not the face value of money or income. As long as the Fed allows the supply of money to increase by 5 percent—the same amount as inflation— the demand for money and its supply will both grow at the same rate. Because mo ...
Introduntion - Hakan Berument`sHomepage
... possible especially just before elections or when there is a positive output gap. However, increasing spending increases interest rates. ...
... possible especially just before elections or when there is a positive output gap. However, increasing spending increases interest rates. ...
Aggregate Demand
... goods and services • Goods and services in consumer spending aren’t relevant to the aggregate demand curve • If consumers decide to buy fewer clothes but more cars, this doesn’t change the total quantity of final goods and services they demand ...
... goods and services • Goods and services in consumer spending aren’t relevant to the aggregate demand curve • If consumers decide to buy fewer clothes but more cars, this doesn’t change the total quantity of final goods and services they demand ...
Mankiw 5/e Chapter 11: Aggregate Demand II
... A sudden fall in expected inflation means the exante real interest rate rises for any given nominal rate (i) ...
... A sudden fall in expected inflation means the exante real interest rate rises for any given nominal rate (i) ...
Parkin-Bade Chapter 34
... rate of real GDP and medium-term changes in the velocity of circulation of the monetary base. The rule is based on the quantity theory of money. The McCallum rule does not need an estimate of either the real interest rate or the output gap. The McCallum rule relies on the demand for money and the de ...
... rate of real GDP and medium-term changes in the velocity of circulation of the monetary base. The rule is based on the quantity theory of money. The McCallum rule does not need an estimate of either the real interest rate or the output gap. The McCallum rule relies on the demand for money and the de ...
Chapter 19
... Did Greenspan follow the Taylor Rule? “ … rules that relate the setting of the federal funds rate to the deviations of output and inflation from their respective targets, in some configurations, do seem to capture the broad contours of what we did over the past decade and a half.”[1] [1] Greenspa ...
... Did Greenspan follow the Taylor Rule? “ … rules that relate the setting of the federal funds rate to the deviations of output and inflation from their respective targets, in some configurations, do seem to capture the broad contours of what we did over the past decade and a half.”[1] [1] Greenspa ...
Mankiw 5/e Chapter 11: Aggregate Demand II - uc
... A sudden fall in expected inflation means the exante real interest rate rises for any given nominal rate (i) ...
... A sudden fall in expected inflation means the exante real interest rate rises for any given nominal rate (i) ...
An optimum-currency
... originator of the concept of an optimum-currency-area, the basic tenets of optimumcurrency-area theory had already been worked-out by Friedman by the early 1950s (Cesarano, 2006). In formulating the notion of an optimum-currency-area, Mundell appears to have been trying to refute Friedman’s ‘‘strong ...
... originator of the concept of an optimum-currency-area, the basic tenets of optimumcurrency-area theory had already been worked-out by Friedman by the early 1950s (Cesarano, 2006). In formulating the notion of an optimum-currency-area, Mundell appears to have been trying to refute Friedman’s ‘‘strong ...
QUIZ 2: Macro – Winter 2002 - The University of Chicago Booth
... expected inflation does not affect money demand (MD), (4) the capital stock (K) is fixed, (5) all exogenous variables (A, tax rates, government spending, Fed policy, etc.) are fixed unless told otherwise, (7) we are considering a closed economy (NX=0), and (8) changes in N do not independently affec ...
... expected inflation does not affect money demand (MD), (4) the capital stock (K) is fixed, (5) all exogenous variables (A, tax rates, government spending, Fed policy, etc.) are fixed unless told otherwise, (7) we are considering a closed economy (NX=0), and (8) changes in N do not independently affec ...
New Monetary Policy and Keynes
... policy is no longer viewed as a powerful macroeconomic instrument (in any case it is hostage to the slow and uncertain legislative process). Monetary policy has, thus, been upgraded and fiscal policy has been downgraded. (iv) Monetary policy can be used to meet the objective of low rates of inflatio ...
... policy is no longer viewed as a powerful macroeconomic instrument (in any case it is hostage to the slow and uncertain legislative process). Monetary policy has, thus, been upgraded and fiscal policy has been downgraded. (iv) Monetary policy can be used to meet the objective of low rates of inflatio ...
Gold sterilization and the recession of 1937–1938
... been fully assessed. Friedman and Schwartz (, p. ) maintained that ‘The combined impact of the rise in reserve requirements and – no less important – the Treasury gold-sterilization program first sharply reduced the rate of increase in the monetary stock and then converted it into a decline’ ...
... been fully assessed. Friedman and Schwartz (, p. ) maintained that ‘The combined impact of the rise in reserve requirements and – no less important – the Treasury gold-sterilization program first sharply reduced the rate of increase in the monetary stock and then converted it into a decline’ ...
Low Inflation, Deflation, and Policies for Future Price Stability A
... economic instability could increase. Also when inflation gets negative a downward spiral can occur which lowers inflation, which raises real interest rates, which lowers inflation even further, and so on. The constraint that the nominal interest rate cannot go below the lower bound of zero has been ...
... economic instability could increase. Also when inflation gets negative a downward spiral can occur which lowers inflation, which raises real interest rates, which lowers inflation even further, and so on. The constraint that the nominal interest rate cannot go below the lower bound of zero has been ...
" For a closed economy, the national income identity is written as Y
... ing the demand (either through a …scal or monetary policy). This brings output to its previous level, but the prices are permanently higher. A note on Monetary Policy: The increase in demand that we see on the right graph in the previous slide can be caused by an increase in the money supply by Cent ...
... ing the demand (either through a …scal or monetary policy). This brings output to its previous level, but the prices are permanently higher. A note on Monetary Policy: The increase in demand that we see on the right graph in the previous slide can be caused by an increase in the money supply by Cent ...
Rezende - The Nature of Government Finance in Brazil
... the offsetting entry, the reserves from the taxpayer’s commercial bank are reduced by R$100 as well. As the government received a tax payment, the reserve balance of the taxpayer’s bank was reduced, that is, bank reserves were destroyed.8 At the same time, the taxpayer’s bank deposit was debited. In ...
... the offsetting entry, the reserves from the taxpayer’s commercial bank are reduced by R$100 as well. As the government received a tax payment, the reserve balance of the taxpayer’s bank was reduced, that is, bank reserves were destroyed.8 At the same time, the taxpayer’s bank deposit was debited. In ...
chapter - Macmillan Learning
... demand for money (a rightward shift of the MD curve), and lower prices reduce the demand for money (a leftward shift of the MD curve). We can actually be more specific than this: other things equal, the demand for money is proportional to the price level. That is, if the aggregate price level rises ...
... demand for money (a rightward shift of the MD curve), and lower prices reduce the demand for money (a leftward shift of the MD curve). We can actually be more specific than this: other things equal, the demand for money is proportional to the price level. That is, if the aggregate price level rises ...
A Primer on Inflation
... inflation, higher nominal growth can be induced by an increase in price inflation. At the end of 2008, Kenneth Rogoff, former chief economist of the IMF, already wrote in the Central Banking Journal that a higher rate of price inflation of 5% to 6% would be healthier in coming years than deflation a ...
... inflation, higher nominal growth can be induced by an increase in price inflation. At the end of 2008, Kenneth Rogoff, former chief economist of the IMF, already wrote in the Central Banking Journal that a higher rate of price inflation of 5% to 6% would be healthier in coming years than deflation a ...
Milton Friedman`s economics and political - Hans-Böckler
... understanding and practice despite its deep flaws. Friedman’s methodological frame rests on a distinction between “positive” and “normative” economics. The core premise is: “Positive economics is in principle independent of any particular ethical position or normative judgments…it deals with “what i ...
... understanding and practice despite its deep flaws. Friedman’s methodological frame rests on a distinction between “positive” and “normative” economics. The core premise is: “Positive economics is in principle independent of any particular ethical position or normative judgments…it deals with “what i ...
Monetary Policy - Federal Reserve Bank of Philadelphia
... a. Which function of the Federal Reserve can be used to affect overall economic conditions by changing the growth of the money supply and, in turn, interest rates? (Monetary policy.) b. Why is the growth of the money supply critical to the economy? (The growth of the money supply ultimately determin ...
... a. Which function of the Federal Reserve can be used to affect overall economic conditions by changing the growth of the money supply and, in turn, interest rates? (Monetary policy.) b. Why is the growth of the money supply critical to the economy? (The growth of the money supply ultimately determin ...
Zestos(243).pdf
... as the most important monetary instrument employed by the Fed to conduct monetary policy1. The federal funds rate (rff) is the interest rate that the Federal Reserve member commercial banks charge each other when they borrow overnight reserves to meet the Fed reserve requirement. The rff therefore i ...
... as the most important monetary instrument employed by the Fed to conduct monetary policy1. The federal funds rate (rff) is the interest rate that the Federal Reserve member commercial banks charge each other when they borrow overnight reserves to meet the Fed reserve requirement. The rff therefore i ...
Document
... The Process of Monetary Policy Formulation 1. The refers to the time it takes policymakers to realize that a change in the economy's performance has occurred. a. impact lag b. policy lag c. recognition lag d. operating lag ANSWER: c 2. The refers to the time that elapses between when an action is ta ...
... The Process of Monetary Policy Formulation 1. The refers to the time it takes policymakers to realize that a change in the economy's performance has occurred. a. impact lag b. policy lag c. recognition lag d. operating lag ANSWER: c 2. The refers to the time that elapses between when an action is ta ...
Monetary Integration, Partisanship, and
... macroeconomic costs of militancy. But when interest rates are set for a whole region by a single central bank, the wage demands of any particular national union will not have much of an effect on these rates. The costs of militancy can therefore be externalized, and wage restraint and employment wil ...
... macroeconomic costs of militancy. But when interest rates are set for a whole region by a single central bank, the wage demands of any particular national union will not have much of an effect on these rates. The costs of militancy can therefore be externalized, and wage restraint and employment wil ...