Economics Webinar - Interest Rate Cuts vs. Stimulus Payments: A Macro Equivalence Result

9:00am - 10:30am
Zoom ID : 968 790 9998 (password 8068677)

I extend the textbook New Keynesian model to allow for a general form of Ricardian non-equivalence. In this setting I prove that, as soon as house-holds are not perfectly Ricardian, any aggregate allocation that is implementable via nominal interest rate policy is also implementable by adjusting uniform lump-sum transfer payments. It follows that conventional fiscal policy using stimulus checks can perfectly substitute for monetary policy when interest rates are con-strained by an effective lower bound. I further show that, in a simple model of Ricardian non-equivalence due to uninsurable household income risk, the mapping from infeasible interest rate policy to equivalent transfer payments is fully characterized by a small number of empirically measurable sufficient statistics. I document that this simple sufficient statistics characterization remains nearly exact even in a rich Heterogeneous Agent New Keynesian (HANK) model.

场地开放时间
9am
讲者/ 表演者:
Dr. Christian Wolf
University of Chicago

https://www.christiankwolf.com/

语言
英文
适合对象
校友
教职员
研究生
主办单位
经济学系
联系方法

Julie Wong by email: fnjuwong@ust.hk

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