Liquidity Trap And Excessive Leverage PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Liquidity Trap And Excessive Leverage PDF full book. Access full book title Liquidity Trap And Excessive Leverage.
| Author | : Mr.Anton Korinek |
| Publisher | : International Monetary Fund |
| Total Pages | : 49 |
| Release | : 2014-07-21 |
| Genre | : Business & Economics |
| ISBN | : 1498356397 |
Download Liquidity Trap and Excessive Leverage Book in PDF, ePub and Kindle
We investigate the role of macroprudential policies in mitigating liquidity traps driven by deleveraging, using a simple Keynesian model. When constrained agents engage in deleveraging, the interest rate needs to fall to induce unconstrained agents to pick up the decline in aggregate demand. However, if the fall in the interest rate is limited by the zero lower bound, aggregate demand is insufficient and the economy enters a liquidity trap. In such an environment, agents' exante leverage and insurance decisions are associated with aggregate demand externalities. The competitive equilibrium allocation is constrained inefficient. Welfare can be improved by ex-ante macroprudential policies such as debt limits and mandatory insurance requirements. The size of the required intervention depends on the differences in marginal propensity to consume between borrowers and lenders during the deleveraging episode. In our model, contractionary monetary policy is inferior to macroprudential policy in addressing excessive leverage, and it can even have the unintended consequence of increasing leverage.
| Author | : Karel Mertens |
| Publisher | : |
| Total Pages | : 28 |
| Release | : 2011 |
| Genre | : |
| ISBN | : |
Download Credit Channels in a Liquidity Trap Book in PDF, ePub and Kindle
| Author | : Mr.Jiaqian Chen |
| Publisher | : International Monetary Fund |
| Total Pages | : 66 |
| Release | : 2020-06-12 |
| Genre | : Business & Economics |
| ISBN | : 1513546805 |
Download The Costs of Macroprudential Deleveraging in a Liquidity Trap Book in PDF, ePub and Kindle
We examine the effects of various borrower-based macroprudential tools in a New Keynesian environment where both real and nominal interest rates are low. Our model features long-term debt, housing transaction costs and a zero-lower bound constraint on policy rates. We find that the long-term costs, in terms of forgone consumption, of all the macroprudential tools we consider are moderate. Even so, the short-term costs differ dramatically between alternative tools. Specifically, a loan-to-value tightening is more than twice as contractionary compared to loan-to-income tightening when debt is high and monetary policy cannot accommodate.
| Author | : Ms.Valerie Cerra |
| Publisher | : International Monetary Fund |
| Total Pages | : 50 |
| Release | : 2020-05-29 |
| Genre | : Business & Economics |
| ISBN | : 1513536990 |
Download Hysteresis and Business Cycles Book in PDF, ePub and Kindle
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.
| Author | : Nina Biljanovska |
| Publisher | : International Monetary Fund |
| Total Pages | : 51 |
| Release | : 2019-08-30 |
| Genre | : Business & Economics |
| ISBN | : 1513512668 |
Download Optimal Macroprudential Policy and Asset Price Bubbles Book in PDF, ePub and Kindle
An asset bubble relaxes collateral constraints and increases borrowing by credit-constrained agents. At the same time, as the bubble deflates when constraints start binding, it amplifies downturns. We show analytically and quantitatively that the macroprudential policy should optimally respond to building asset price bubbles non-monotonically depending on the underlying level of indebtedness. If the level of debt is moderate, policy should accommodate the bubble to reduce the incidence of a binding collateral constraint. If debt is elevated, policy should lean against the bubble more aggressively to mitigate the pecuniary externalities from a deflating bubble when constraints bind.
| Author | : Jiaqian Chen |
| Publisher | : |
| Total Pages | : |
| Release | : 2020 |
| Genre | : |
| ISBN | : |
Download The Costs of Macroprudential Deleveraging in a Liquidity Trap Book in PDF, ePub and Kindle
| Author | : Mr.Stijn Claessens |
| Publisher | : International Monetary Fund |
| Total Pages | : 38 |
| Release | : 2014-12-11 |
| Genre | : Business & Economics |
| ISBN | : 1498340938 |
Download An Overview of Macroprudential Policy Tools Book in PDF, ePub and Kindle
Macroprudential policies – caps on loan to value ratios, limits on credit growth and other balance sheets restrictions, (countercyclical) capital and reserve requirements and surcharges, and Pigouvian levies – have become part of the policy paradigm in emerging markets and advanced countries alike. But knowledge is still limited on these tools. Macroprudential policies ought to be motivated by market failures and externalities, but these can be hard to identify. They can also interact with various other policies, such as monetary and microprudential, raising coordination issues. Some countries, especially emerging markets, have used these tools and analyses suggest that some can reduce procyclicality and crisis risks. Yet, much remains to be studied, including tools’ costs ? by adversely affecting resource allocations; how to best adapt tools to country circumstances; and preferred institutional designs, including how to address political economy risks. As such, policy makers should move carefully in adopting tools.
| Author | : Mr.Jaromir Benes |
| Publisher | : International Monetary Fund |
| Total Pages | : 71 |
| Release | : 2012-08-01 |
| Genre | : Business & Economics |
| ISBN | : 1475505523 |
Download The Chicago Plan Revisited Book in PDF, ePub and Kindle
At the height of the Great Depression a number of leading U.S. economists advanced a proposal for monetary reform that became known as the Chicago Plan. It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits. Irving Fisher (1936) claimed the following advantages for this plan: (1) Much better control of a major source of business cycle fluctuations, sudden increases and contractions of bank credit and of the supply of bank-created money. (2) Complete elimination of bank runs. (3) Dramatic reduction of the (net) public debt. (4) Dramatic reduction of private debt, as money creation no longer requires simultaneous debt creation. We study these claims by embedding a comprehensive and carefully calibrated model of the banking system in a DSGE model of the U.S. economy. We find support for all four of Fisher's claims. Furthermore, output gains approach 10 percent, and steady state inflation can drop to zero without posing problems for the conduct of monetary policy.
| Author | : Laurent Ferrara |
| Publisher | : Springer |
| Total Pages | : 298 |
| Release | : 2018-06-13 |
| Genre | : Business & Economics |
| ISBN | : 3319790757 |
Download International Macroeconomics in the Wake of the Global Financial Crisis Book in PDF, ePub and Kindle
This book collects selected articles addressing several currently debated issues in the field of international macroeconomics. They focus on the role of the central banks in the debate on how to come to terms with the long-term decline in productivity growth, insufficient aggregate demand, high economic uncertainty and growing inequalities following the global financial crisis. Central banks are of considerable importance in this debate since understanding the sluggishness of the recovery process as well as its implications for the natural interest rate are key to assessing output gaps and the monetary policy stance. The authors argue that a more dynamic domestic and external aggregate demand helps to raise the inflation rate, easing the constraint deriving from the zero lower bound and allowing monetary policy to depart from its current ultra-accommodative position. Beyond macroeconomic factors, the book also discusses a supportive financial environment as a precondition for the rebound of global economic activity, stressing that understanding capital flows is a prerequisite for economic-policy decisions.
| Author | : Moritz Schularick |
| Publisher | : University of Chicago Press |
| Total Pages | : 318 |
| Release | : 2022-12-13 |
| Genre | : Business & Economics |
| ISBN | : 022681694X |
Download Leveraged Book in PDF, ePub and Kindle
An authoritative guide to the new economics of our crisis-filled century. Published in collaboration with the Institute for New Economic Thinking. The 2008 financial crisis was a seismic event that laid bare how financial institutions’ instabilities can have devastating effects on societies and economies. COVID-19 brought similar financial devastation at the beginning of 2020 and once more massive interventions by central banks were needed to heed off the collapse of the financial system. All of which begs the question: why is our financial system so fragile and vulnerable that it needs government support so often? For a generation of economists who have risen to prominence since 2008, these events have defined not only how they view financial instability, but financial markets more broadly. Leveraged brings together these voices to take stock of what we have learned about the costs and causes of financial fragility and to offer a new canonical framework for understanding it. Their message: the origins of financial instability in modern economies run deeper than the technical debates around banking regulation, countercyclical capital buffers, or living wills for financial institutions. Leveraged offers a fundamentally new picture of how financial institutions and societies coexist, for better or worse. The essays here mark a new starting point for research in financial economics. As we muddle through the effects of a second financial crisis in this young century, Leveraged provides a road map and a research agenda for the future.
