Same old song: On the macroeconomic and distributional effects of leaving a Low Interest Rate Environment

IF 5 2区 经济学 Q1 ECONOMICS Structural Change and Economic Dynamics Pub Date : 2024-04-04 DOI:10.1016/j.strueco.2024.03.009
Alberto Botta , Eugenio Caverzasi , Alberto Russo
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Abstract

In this paper, we present a hybrid Agent-Based Stock-Flow-Consistent (AB-SFC) model about the macroeconomic and distributional implications of central bank’s decision to leave a “Low(-for-long) Interest Rate Environment” (LIRE). Our goal is to study the non-linear effects of monetary tightening when implemented under LIRE than in an alternative “Higher Interest Rate” setting (HIRE). This way, we shed light over the interaction between monetary policy, inequality, and macro-financial fragility in a financialized economy characterized by the presence of securitization and the production of complex financial products, i.e., Asset-Backed Securities (ABSs). We obtain three main findings. First, consistent with existing empirical literature, LIRE may be sources of vulnerabilities in the financial industry (i.e., lower banks’ profitability and capital adequacy ratio). However, it may reduce systemic macro-financial risk by stimulating faster growth, lower unemployment and inequality records alongside with lower public and private indebtedness and lower-scale securitization. Second, central bank’s decision to raise interest rates improves financial sector’s performance indicators at the costs of harsh real-side consequences, i.e., permanently higher unemployment and inequality, when implemented under LIRE. Third, financialization structurally changes the functioning of the economy by feeding the creation of a debt-led economy in which monetary policy becomes less effective in its attempt of controlling inflation. Central bank’s reaction in the form of a permanently tighter monetary policy stance eventually prompts a more unequal and unstable rentier-friendly economy.

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老调重弹:脱离低利率环境对宏观经济和分配的影响
在本文中,我们提出了一个基于代理的存量-流量-一致性(AB-SFC)混合模型,该模型涉及中央银行离开 "低(长期)利率环境"(LIRE)的决策对宏观经济和分配的影响。我们的目标是研究在 "低(长期)利率环境 "下实施货币紧缩政策与在另一种 "高利率环境"(HIRE)下实施货币紧缩政策的非线性影响。这样,我们就能揭示在以证券化和复杂金融产品(即资产支持证券)的生产为特征的金融化经济中,货币政策、不平等和宏观金融脆弱性之间的相互作用。我们得出了三个主要结论。首先,与现有的实证文献一致,LIRE 可能是金融业脆弱性的来源(即降低银行的盈利能力和资本充足率)。然而,LIRE 可以通过刺激经济快速增长、降低失业率和不平等记录,同时降低公共和私人债务以及证券化规模,从而降低系统性宏观金融风险。其次,中央银行提高利率的决定改善了金融部门的绩效指标,但同时也带来了严重的实际后果,即长期的失业率上升和不平等。第三,金融化从结构上改变了经济运行,助长了债务主导型经济的形成,在这种经济中,货币政策在试图控制通货膨胀时变得不那么有效。中央银行以长期紧缩货币政策立场的形式做出反应,最终会促使经济更加不平等和不稳定。
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来源期刊
CiteScore
9.60
自引率
4.90%
发文量
159
期刊介绍: Structural Change and Economic Dynamics publishes articles about theoretical, applied and methodological aspects of structural change in economic systems. The journal publishes work analysing dynamics and structural breaks in economic, technological, behavioural and institutional patterns.
期刊最新文献
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