This paper builds a theory of macroprudential policy whose only friction is nominal rigidity in goods and labor markets, possibly combined with a constraint on monetary policy such as the zero lower …
Bank leverage is the linchpin of a risk-taking channel through which monetary policy travels across borders: in a pre-crisis quarterly VAR a tighter US policy rate raises the VIX, lowers broker-dealer …
Embedding the Kydland-Prescott/Barro-Gordon time-inconsistency logic into a standard sticky-price, cash-credit-goods general equilibrium model, this paper shows the model generically has either two …
Writing for the 30th anniversary of Milton Friedman and Anna Schwartz's *A Monetary History of the United States, 1867-1960*, Lucas argues the book's lasting contribution is a normative one -- it …
PublishedClassicReview of Financial StudiesOnline 7 Apr 2020Published Feb 2021
Identifying US monetary policy shocks from daily moves in five-year Treasury futures around FOMC announcements, this paper shows that during the unconventional-policy years those shocks largely …
Estimated Taylor-type policy rules typically find the Fed adjusts the funds rate only 20-30 percent of the way to its desired level each quarter, widely read as deliberate "interest rate smoothing" -- …
PublishedClassicEuropean Economic ReviewOnline 21 Nov 2010Published Jan 2011
Using the government-debt valuation equation -- the requirement that the real value of outstanding government debt equal the present value of future primary surpluses -- this paper argues that after …