Christiano et al. (2005) have shown that a standard medium-sized DSGE model can successfully replicate VAR IRFs to a money supply shock. This important result vanishes under limited asset market partic- ipation. Further, even a moderate fraction of constrained consumers is su¢ cient to dampen the real interest rate reaction to inflation, thereby causeing instability. The introduction of a simple fiscal automatic sta- bilizer restores stability and improves the dynamic performance of the model
Motta, G., Tirelli, P. (2010). Money Targeting, Heterogeneous Agents and Dynamic Instability [Working paper del dipartimento].
Money Targeting, Heterogeneous Agents and Dynamic Instability
MOTTA, GIORGIO ENRICO;TIRELLI, PATRIZIO
2010
Abstract
Christiano et al. (2005) have shown that a standard medium-sized DSGE model can successfully replicate VAR IRFs to a money supply shock. This important result vanishes under limited asset market partic- ipation. Further, even a moderate fraction of constrained consumers is su¢ cient to dampen the real interest rate reaction to inflation, thereby causeing instability. The introduction of a simple fiscal automatic sta- bilizer restores stability and improves the dynamic performance of the model
File in questo prodotto:
| File | Dimensione | Formato | |
|---|---|---|---|
|
Money_Targeting,_Heterogeneous_Agents_and_Dynamic_Instability.pdf
accesso aperto
Tipologia di allegato:
Other attachments
Dimensione
516.58 kB
Formato
Adobe PDF
|
516.58 kB | Adobe PDF | Visualizza/Apri |
I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
