Structural Reforms and Monetary Policies in a Behavioural Macroeconomic Model 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 Structural Reforms and Monetary Policies in a Behavioural Macroeconomic Model PDF full book. Access full book title Structural Reforms and Monetary Policies in a Behavioural Macroeconomic Model by Paul de Grauwe. Download full books in PDF and EPUB format.
Author: Paul de Grauwe Publisher: ISBN: Category : Business cycles Languages : en Pages : 42
Book Description
We use a New Keynesian behavioral macroeconomic model to analyze how structural reforms affect the nature of the business cycle and the capacity of the central bank to stabilize output and inflation. We find that structural reforms that increase the flexibility of wages and prices can have profound effects on the dynamics of the business cycle. Our main finding here is that there is an optimal level of flexibility (produced by structural reforms). We also find that in a rigid economy the central bank in general faces a tradeoff between output and inflation volatility. This tradeoff disappears when the economy becomes sufficiently flexible. In that case the central bank's efforts at stabilizing inflation and output are always welfare improving.
Author: Paul de Grauwe Publisher: ISBN: Category : Business cycles Languages : en Pages : 42
Book Description
We use a New Keynesian behavioral macroeconomic model to analyze how structural reforms affect the nature of the business cycle and the capacity of the central bank to stabilize output and inflation. We find that structural reforms that increase the flexibility of wages and prices can have profound effects on the dynamics of the business cycle. Our main finding here is that there is an optimal level of flexibility (produced by structural reforms). We also find that in a rigid economy the central bank in general faces a tradeoff between output and inflation volatility. This tradeoff disappears when the economy becomes sufficiently flexible. In that case the central bank's efforts at stabilizing inflation and output are always welfare improving.
Author: MissAnna Rose Bordon Publisher: International Monetary Fund ISBN: 1513590243 Category : Business & Economics Languages : en Pages : 28
Book Description
Structural reforms are expected to lift growth and employment, but their effects are surprisingly difficult to pin down empirically. One reason is their potential endogeneity to the economic environment in which they are conducted. For example, the impact of a reform implemented shortly before a cyclical upswing is difficult to distinguish from the recovery itself. Similarly, macroeconomic policies conducted along a structural reform could affect the estimated impact. Exploring various options, this paper develops robust estimates of the impact of labor and product market reforms by using local projection techniques while controlling for endogeneity of reforms and other biases. The results suggest that labor and product market reforms have a lagged but positive impact on employment creation, and the positive effect remains even after controlling for the endogeneity of the decision to reform. Supportive macroeconomic policies are found to increase the effect of labor and product market reforms, consistent with the view that some structural reforms are best initiated in conjunction with supportive fiscal or monetary policy.
Author: Paul De Grauwe Publisher: Oxford University Press ISBN: 0192568361 Category : Business & Economics Languages : en Pages : 256
Book Description
Modern macroeconomics has been based on the paradigm of the rational individual capable of understanding the complexity of the world. This has created a very shallow theory of the business cycle in which nothing happens in the macroeconomy unless shocks occur from outside. Behavioural Macroeconomics: Theory and Policy uses a different paradigm. It assumes that individual agents experience cognitive limitations preventing them from having rational expectations. Instead these individuals use simple rules of behaviour. Behavioural Macroeconomics introduces rationality by allowing individuals to learn from their mistakes and to switch to the rules that perform better. It introduces the idea of endogenously generated "animals spirits" that drive the business cycle and are in turn influenced by it, and applies this model to shed new light on a number of important issues. It analyses the role of fiscal policy in stabilizing the economy while maintaining debt sustainability; expands the model to include a banking sector and show how banks amplify the booms and busts; and explains how animal spirits help to synchronize the business cycles across countries. The model set out in Behavioural Macroeconomics leads to very different policy implications from the mainstream macroeconomic model. It shows how policymakers have a responsibility to stabilize an otherwise unstable system.
Author: Philipp Huber Publisher: GRIN Verlag ISBN: 3346000702 Category : Business & Economics Languages : en Pages : 67
Book Description
Bachelor Thesis from the year 2018 in the subject Economics - Macro-economics, general, grade: 1,3, University of Frankfurt (Main) (House of Finance), language: English, abstract: Many well-known economists argue to achieve a prospering economy; it is crucially important to have an efficient collaboration between a country’s monetary policy, concerning a stable currency and inflation rate, as well as a proper fiscal policy, including structural reforms and governmental spendings. In the backdrop of this opinion, the European Monetary Union (EMU) was established in 1999, in which the monetary policy for several countries is centralised in one institution, the European Central Bank (ECB). This is a massive achievement, as for most of Europe’s history, it has been at war with itself, which did not foster any trade or other kinds of economic co-operation. Europe was always a continent of trade barriers, tariffs and different currencies. Therefore, doing business across borders was always highly sluggish, and in the light of all these obstacles, it tended to stifle economic growth. After World War II has left Europe in a devastating condition, the natural choice to rebuild the continent was to remove these ancient barriers. By implementing the Euro in 1999, this went even a step further. Domestic currencies ended to exist as well as the very individual monetary policies. In consequence the national central banks shifted the control to the newly formed ECB. The Eurozone had now one unified monetary policy, but still many different fiscal policies in the respective member states. Before the Euro was born, countries like Greece or Italy not only had to pay high interest rates to borrow money, they also could only lend a limited amount, as lenders were not comfortable providing them too many credits. However, as they became members of the European Monetary Union, the tables turned, because big security providers, like Germany, were now part of it.
Author: Jakob de Haan Publisher: Springer ISBN: 3319744003 Category : Political Science Languages : en Pages : 293
Book Description
This book presents a selection of contributions on the timely topic of structural reforms in Western economies, written by experts from central banks, the International Monetary Fund, and leading universities. It includes latest research on the impacts of structural reforms on the market economy, especially on the labor market, and investigates the results of collective bargaining in theory and practice. The book also comprises case studies of structural reforms. A literature survey on the topic serves as a valuable source for further research. The book is written by and targeted at both academics and policy makers.
Author: Matteo Cacciatore Publisher: International Monetary Fund ISBN: 1484324269 Category : Business & Economics Languages : en Pages : 65
Book Description
This paper studies the impact of product and labor market reforms when the economy faces major slack and a binding constraint on monetary policy easing. such as the zero lower bound. To this end, we build a two-country model with endogenous producer entry, labor market frictions, and nominal rigidities. We find that while the effect of market reforms depends on the cyclical conditions under which they are implemented, the zero lower bound itself does not appear to matter. In fact, when carried out in a recession, the impact of reforms is typically stronger when the zero lower bound is binding. The reason is that reforms are inflationary in our structural model (or they have no noticeable deflationary effects). Thus, contrary to the implications of reduced-form modeling of product and labor market reforms as exogenous reductions in price and wage markups, our analysis shows that there is no simple across-the-board relationship between market reforms and the behavior of real marginal costs. This significantly alters the consequences of the zero (or any effective) lower bound on policy rates.
Author: R. Solow Publisher: Springer ISBN: 0230524443 Category : Business & Economics Languages : en Pages : 180
Book Description
The relation between structural reform and macroeconomic policy underlies the widespread perception that the large European economies have under-performed in the past decade in comparison both with their own standards and with the contemporaneous performance of the United States. This book, edited and introduced by Noel Laureate Robert M. Solow, provides analyses of how these economies could take a co-ordinated and simultaneous approach to reform in labour and product markets and the demand side.
Author: Mr.Pierre L. Siklos Publisher: International Monetary Fund ISBN: 1451967322 Category : Business & Economics Languages : en Pages : 30
Book Description
This paper surveys three types of monetary arrangements. It considers how the choice of an exchange rate regime, the degree of central bank independence, or choice of currency unions or boards depends not only on economic considerations but also on political economy considerations. In economic terms, the choice of monetary regime will depend on the policy that is best suited to reducing or stabilizing inflation. In political economy terms, the choice of monetary arrangement will ultimately depend on how independent a country wishes to be from shocks emanating from the rest of the world and the weight politicians attach to influencing economic conditions in their own country.
Author: Roman Frydman Publisher: Princeton University Press ISBN: 0691155232 Category : Business & Economics Languages : en Pages : 440
Book Description
This book originated from a 2010 conference marking the fortieth anniversary of the publication of the landmark "Phelps volume," Microeconomic Foundations of Employment and Inflation Theory, a book that is often credited with pioneering the currently dominant approach to macroeconomic analysis. However, in their provocative introductory essay, Roman Frydman and Edmund Phelps argue that the vast majority of macroeconomic and finance models developed over the last four decades derailed, rather than built on, the Phelps volume's "microfoundations" approach. Whereas the contributors to the 1970 volume recognized the fundamental importance of according market participants' expectations an autonomous role, contemporary models rely on the rational expectations hypothesis (REH), which rules out such a role by design. The financial crisis that began in 2007, preceded by a spectacular boom and bust in asset prices that REH models implied could never happen, has spurred a quest for fresh approaches to macroeconomic analysis. While the alternatives to REH presented in Rethinking Expectations differ from the approach taken in the original Phelps volume, they are notable for returning to its major theme: understanding aggregate outcomes requires according expectations an autonomous role. In the introductory essay, Frydman and Phelps interpret the various efforts to reconstruct the field--some of which promise to chart its direction for decades to come. The contributors include Philippe Aghion, Sheila Dow, George W. Evans, Roger E. A. Farmer, Roman Frydman, Michael D. Goldberg, Roger Guesnerie, Seppo Honkapohja, Katarina Juselius, Enisse Kharroubi, Blake LeBaron, Edmund S. Phelps, John B. Taylor, Michael Woodford, and Gylfi Zoega.
Author: Paul de Grauwe
Author: Paul de Grauwe
Author: MissAnna Rose Bordon
Author: Paul De Grauwe
Author: Philipp Huber
Author: Paul De Grauwe
Author: Jakob de Haan
Author: Matteo Cacciatore
Author: R. Solow
Author: Mr.Pierre L. Siklos
Author: Roman Frydman