... things, making loan against a wide variety of collateral under special lending programs The Fed’s ability to alter the monetary base and its balance sheet pretty much at will through open market ... inflation, the Fed’s influence and responsibility were quite evident During a depression, the Fed or any other central bank can often hide its responsibility for continued economic weakness behind ... management of policy, as well as with his own credibility with the public and Congress, which in turn strongly affects his internal credibility Nevertheless, a chairman can have an outsized impact...
... families and on society, but it also poses risks to the sustainability of the recovery itself through its effects on households’ incomes and confidence Maintaining price stability is also a central ... global economic activity and the beginnings of a recovery Concerted government efforts to restore confidence in the financial system, including the aggressive provision of liquidity by central banks, ... slow recovery in the labor market has restrained growth in labor income, raised uncertainty about job security and prospects, and damped confidence Also, although consumer credit shows some signs...
... In reality, the trend change of velocity and the central bank’s target rate of inflation should also be taken into account when formulating a money supply rule For the sake of simplicity, this ... particular magnitude Typical target variables are the money supply, which except for changes in velocity should increase at the same rate as nominal GDP, or the rate of inflation A typical, implicit ... targets of the ECB are described in the Treaty establishing the European Community.16 The independence of the ECB is clearly defined According to the Treaty, “neither the ECB, nor a national central...
... the aggregate supply of broad liquidity Thus, open market operations would have the potential to manage productively the aggregate quantity of broad liquidity in the economy independently of interest ... money More importantly, the Fed’s ability to affect broad liquidity in this way is strictly limited by the size of its balance sheet For the broad liquidity management contemplated here to be ... Milton 1959 A Program for Monetary Stability New York: Fordham University Press Holmstrom, Bengt, and Jean Tirole 1998 “Private and Public Supply of Liquidity.” Journal of Political Economy 106 (February):...
... uncertainty While its substantive concern (financial market volatility) is quite different, Jansen (2008) supports this suggestion Using objective measures of readability to measure the clarity of ... understand the degree of uncertainty surrounding monetary policy making But in the collegial case, a similar diversity of views, if made public, might undermine clarity and common understanding Therefore, ... not tell us whether the rise in volatility reflects an increase 26 ECB Working Paper Series No 898 May 2008 in market uncertainty or a decrease in uncertainty that is outweighed by the immediate...
... that the liquidity indicator captures the probability of a bank default only in the first part of the sample when securitisation is limited It also suggests that banks hold liquidity not only to ... bank size, liquidity and capitalisation (the standard indicators used in the bank lending channel literature) may not be adequate for the accurate assessment of banks’ ability and willingness ... equity issuance on a large scale to compensate for writeoffs However, due to the higher level of risk, as perceived by the financial markets, and the large amount of capital needed, equity issuance...
... representative consumer Banks choose between two types of firms to fund, where risky firms have a higher volatility of productivity than safe firms This volatility is harmful to consumers because firms have ... scale imply that in selecting a firm type to finance, banks face the same type of trade-off as in the previous section Bad type firms offer a higher volatility of returns, which 17 is of value to ... authority places weight on a financial stability objective In response to a negative demand shock, this objective is shown to make rate cuts both deeper and shorter-lived, as the monetary authority...
... the capacity to have a higher future standard of living44. From this perspective, higher equity prices constitute wealth only if based on higher expected productivity and ... The first has been an environment of ever growing uncertainty about a number of important issues; future domestic demand in light of uncertainty about job prospects, future foreign demand given uncertainty about exchange rates and protectionism, and uncertainty as to how ... pressures and/or the possibility of excessive disinflation (or even deflation) over the medium term. See White (2006a). Operationally, this implies that separating the price stability function from the financial stability function ...
... bank learns its private type j J fh; lg; where j=f h with prob (“high type” ) l (“low type” ) with prob In aggregate, half of banks are type h and half are type l Banks of type j J have a fraction ... types The planner can ignore the liquidity-shock state i, bank type j; and bank ij liquidity withdrawal shocks : The planner maximizes the expected utility of depositors subject to feasibility ... different types of liquidity shocks Finally, we show that failure to cut interest rates during a crisis erodes financial stability by increasing the probability of bank runs Key words: bank liquidity,...
... đoái Hình A8 cung cấp nhìn sâu sắc chút Một lần nữa, nhấn mạnh tỷ giá hối đoái có tác động lâu dài giá sản xuất Hình A7: Hàm phản ứng xung cho mô hình VAR vi phân bậc ( 10 chu kỳ) Hình A8: ... theo hướng trực tiếp hơn, mô hình Var đồng liên kết sửdụng biến thay đổi TGHĐ, MPI RPI nên ước tính kì vọng xác mô hình Var đệ quy Bảng 3: Kiểm định sơ PHÂN TÍCH THỰC NGHIỆM PHƯƠNG PHÁP TIẾP ... TIẾP CẬN ĐỒNG LIÊN KẾT Xây dựng mô hình Mô hìnhđồng liên kết VAR(k) viết dạng mô hình hiệu chỉnh sai số ECM sau: Bảng Kiểm định hệ số đồng liên kết Sử dụng: Kiểm định Thống kê Trace Bảng Các...
... Group, Monetary Authority o S gapo e o eta y ut o ty of Singapore March 14, 2012 The following comments are my personal views and should not be attributed to the Monetary Authority of Singapore Comments ... commodity prices h bl h high fl l key The problem with h h inflation raises several k issues Macroeconomic management; Monetary policy goals; Monetary policy transparency and predictability; ... percent in 2008 Due in large part to rising international commodity prices and excess domestic demand Once domestic demand and commodity p y prices weakened, , inflation dropped to 2.5 percent in...
... property prices is likely to have a greater impact on residential property prices and GDP than if mortgage equity extraction is not possible Figure shows that the ability to withdraw mortgage equity ... property prices that are seen as causing a threat to financial stability, it would induce potentially large swings in real economic activity: To offset a 15% rise in residential property prices, ... monetary policy, asset prices and financial stability raise macroeconomic volatility, potentially increasing the risk of financial instability developing Fourth, the size of interest rate movements...
... accompany new equity issues see Myers-Majluf (1984)) for a bank to adjust the amount of equity financing it has, then (6) may bind It is easy to see that in this case, the liquidity constraint ... using simple VAR-type causality tests, shows that the spread between the prime rate and the commercial paper rate is a poor predictor of output (much worse than the KSW quantity-based mix variable, ... of liquidity-constrained firms and then investigate whether these liquidity constraints become more binding in the wake of a shift in monetary policy To the extent that the liquidity constrained...
... Instruments, Intermediate Targets and Goals The Price Stability Goal • Low and stable inflation • Inflation – Creates uncertainty and difficulty in planning for future – Lowers economic growth – Strains ... Targeting Overnight Funds Criteria for Choosing the Policy Instrument • Observability and Measurability • Controllability • Predictable effect on Goals The Taylor Rule, NAIRU, and the Phillips Curve ... in time-inconsistency trap – Stresses transparency and accountability • Disadvantages – – – – Delayed signaling Too much rigidity Potential for increased output fluctuations Low economic growth...
... – As the price level rises, the quantity of money in real terms falls, and the LM curve shifts to the left until it reaches Yn (long-run monetary neutrality) • Neither monetary nor fiscal policy...
... commit to price stability over the long-term is to maintain a political constituency in civil society supportive of such a policy regime.8 That support from civil society, not any legal statute, ... its ‘political virginity’ or purity last month.14 One is tempted to ignore or dismiss such idle chatter, but let us take it at its vulgar face value to show just how empty these characterizations ... of virginal purity, of a stylized maiden’s reputation, tend to be backward superstitious cultures that impede people exercising autonomy and making responsible choices For society, and arguably...
... θ−1 θ dj Ptz (i) Ptz −θz Ptz (i) Ptz −θz θ θ−1 Yt (j)dj Yt Vty , and Vty ≡ (7) (Yt (j)/Yt )dj Note that Vty becomes larger than unity if Yt = Yt (j) for some j It is assumed that final-goods firms ... using the labor force of type i as the sole input The production function is simply given by Zt (i) = At Lt (i), (5) where At is a countrywide productivity shock with mean unity The owners of intermediate-goods ... proviso that there is a possibility of revaluation with probability − q In 90 International Journal of Central Banking September 2008 this case, the length of maturity is expressed as a random variable...