Abstract Conventional monetary policy has been shown to create differential impacts on industry output. This paper looks at unconventional monetary policy to see its differential impacts on industries in the United States. Identification is achieved with zero and sign restrictions within a structural global vector autoregressive framework. The effects of unconventional monetary policy on output have substantial heterogeneity across industries. Furthermore, the effects on output and monetary policy transmission mechanisms are qualitatively similar to that of conventional monetary policy previously reported in the literature. These findings suggest a substitutability between conventional and unconventional monetary policies. Importantly, policymakers can use unconventional monetary policy and be reassured that impacts on specific industries are similar to those using conventional monetary policy.
{"title":"Industry Impacts of US Unconventional Monetary Policy","authors":"Eiji Goto","doi":"10.1515/bejm-2022-0184","DOIUrl":"https://doi.org/10.1515/bejm-2022-0184","url":null,"abstract":"Abstract Conventional monetary policy has been shown to create differential impacts on industry output. This paper looks at unconventional monetary policy to see its differential impacts on industries in the United States. Identification is achieved with zero and sign restrictions within a structural global vector autoregressive framework. The effects of unconventional monetary policy on output have substantial heterogeneity across industries. Furthermore, the effects on output and monetary policy transmission mechanisms are qualitatively similar to that of conventional monetary policy previously reported in the literature. These findings suggest a substitutability between conventional and unconventional monetary policies. Importantly, policymakers can use unconventional monetary policy and be reassured that impacts on specific industries are similar to those using conventional monetary policy.","PeriodicalId":431854,"journal":{"name":"The B.E. Journal of Macroeconomics","volume":"43 10","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-06-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141334936","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jaime Alonso-Carrera, María Jesús Freire-Serén, Xavier Raurich
Abstract We identify the mechanisms governing the propagation of technological shocks to the sectoral allocation of labor in a non-parameterized growth model. These propagation mechanisms are: (i) the change in aggregate income; whose effect on sectoral composition depends on the income elasticities of consumption demand; (ii) the change in the relative prices of consumption goods, which alters the sectoral composition depending on the Allen-Uzawa elasticities of substitution between goods; (iii) the change in the rental rates, whose effect on sectoral composition is determined by the sectoral elasticities of substitution between capital and labor; and, (iv) the direct effect of the sector and factor bias of the technological change. From this analysis, we derive an accounting method to measure the contribution of these propagation mechanisms to structural change in parameterized growth models. By using some well-known parameterizations, we account for the contribution of each mechanism to the U.S. structural change in the period 1948–2010.
{"title":"Decomposing Structural Change","authors":"Jaime Alonso-Carrera, María Jesús Freire-Serén, Xavier Raurich","doi":"10.1515/bejm-2023-0124","DOIUrl":"https://doi.org/10.1515/bejm-2023-0124","url":null,"abstract":"Abstract We identify the mechanisms governing the propagation of technological shocks to the sectoral allocation of labor in a non-parameterized growth model. These propagation mechanisms are: (i) the change in aggregate income; whose effect on sectoral composition depends on the income elasticities of consumption demand; (ii) the change in the relative prices of consumption goods, which alters the sectoral composition depending on the Allen-Uzawa elasticities of substitution between goods; (iii) the change in the rental rates, whose effect on sectoral composition is determined by the sectoral elasticities of substitution between capital and labor; and, (iv) the direct effect of the sector and factor bias of the technological change. From this analysis, we derive an accounting method to measure the contribution of these propagation mechanisms to structural change in parameterized growth models. By using some well-known parameterizations, we account for the contribution of each mechanism to the U.S. structural change in the period 1948–2010.","PeriodicalId":431854,"journal":{"name":"The B.E. Journal of Macroeconomics","volume":" 5","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-06-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141374652","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Financial frictions have been considered a crucial factor in explaining growth disparities across countries. These frictions are typically viewed as an exogenous constraint on borrowing capacity that is assumed to be invariant to economic conditions, such as the level of GDP and business cycle fluctuations. However, assuming the exogenous constraint on borrowing often leads to unrealistic dynamics in macroeconomic variables, such as constant investment-to-GDP and loan-to-value ratios. Motivated by these limitations, we develop a growth model in which the severity of the borrowing constraint is endogenously determined. The borrowing constraint adversely affects growth and amplifies the negative effect of volatility on growth. However, these growth effects gradually disappear as the economy continues to grow, because debtors become more willing to honor their debts along with economic growth, resulting in an endogenous relaxation of the borrowing constraint.
{"title":"Endogenous Financial Friction and Growth","authors":"Minhyeon Jeong","doi":"10.1515/bejm-2024-0028","DOIUrl":"https://doi.org/10.1515/bejm-2024-0028","url":null,"abstract":"\u0000 Financial frictions have been considered a crucial factor in explaining growth disparities across countries. These frictions are typically viewed as an exogenous constraint on borrowing capacity that is assumed to be invariant to economic conditions, such as the level of GDP and business cycle fluctuations. However, assuming the exogenous constraint on borrowing often leads to unrealistic dynamics in macroeconomic variables, such as constant investment-to-GDP and loan-to-value ratios. Motivated by these limitations, we develop a growth model in which the severity of the borrowing constraint is endogenously determined. The borrowing constraint adversely affects growth and amplifies the negative effect of volatility on growth. However, these growth effects gradually disappear as the economy continues to grow, because debtors become more willing to honor their debts along with economic growth, resulting in an endogenous relaxation of the borrowing constraint.","PeriodicalId":431854,"journal":{"name":"The B.E. Journal of Macroeconomics","volume":"8 3","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-05-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140963892","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract In China, state-owned firms exhibit easier access to external credit but have lower productivity than private firms. We construct a dynamic general equilibrium model incorporating heterogeneous financial frictions to investigate their impact on credit resource misallocation and macroeconomic fluctuations in the Chinese economy. A calibration of our model suggests that heterogeneity in financial frictions can reduce macroeconomic volatility. The mechanism is that heterogeneity in financial frictions induces the procyclicality of credit resource misallocation within entrepreneurs, thus the procyclicality of productivity loss. The stabilization effect depends on the relative magnitude of the impact of the shock on credit resource misallocation within entrepreneurs compared to its impact on the output. In addition, we show that the cost of the stabilization effect of heterogeneity in financial frictions is that it reduces the economy’s aggregate TFP and output at the steady state. Our results imply that neglecting heterogeneity may overestimate the impact of financial frictions on economic volatility in previous studies.
{"title":"Credit Resource Misallocation and Macroeconomic Fluctuations in China: From the Perspective of Heterogeneous Financial Frictions","authors":"Jian Zhou, Zhipeng Zhang, Yu Shao","doi":"10.1515/bejm-2023-0188","DOIUrl":"https://doi.org/10.1515/bejm-2023-0188","url":null,"abstract":"Abstract In China, state-owned firms exhibit easier access to external credit but have lower productivity than private firms. We construct a dynamic general equilibrium model incorporating heterogeneous financial frictions to investigate their impact on credit resource misallocation and macroeconomic fluctuations in the Chinese economy. A calibration of our model suggests that heterogeneity in financial frictions can reduce macroeconomic volatility. The mechanism is that heterogeneity in financial frictions induces the procyclicality of credit resource misallocation within entrepreneurs, thus the procyclicality of productivity loss. The stabilization effect depends on the relative magnitude of the impact of the shock on credit resource misallocation within entrepreneurs compared to its impact on the output. In addition, we show that the cost of the stabilization effect of heterogeneity in financial frictions is that it reduces the economy’s aggregate TFP and output at the steady state. Our results imply that neglecting heterogeneity may overestimate the impact of financial frictions on economic volatility in previous studies.","PeriodicalId":431854,"journal":{"name":"The B.E. Journal of Macroeconomics","volume":"49 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138943769","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This paper investigates multistage taxes on firms in a limited tax capacity economy. We characterize the optimal taxation of informal firms reinterpreting behavioral and mechanical effects. Our numerical exercises highlight the relationship between misreporting costs and the elasticities of reported revenues and costs. We explore a tax reform in Brazil with a survey of informal firms to estimate these elasticities (0.55 and 0.94, respectively), which imply smaller sheltering costs for input expenditures. The optimal multistage tax system includes (i) differential linear taxes across the production chain and (ii) a positive, but very small, tax refund rate.
{"title":"Optimal Taxation of Informal Firms: Misreporting Costs and a Tax Reform in Brazil","authors":"Marcelo Arbex, Enlinson Mattos, R. Regatieri","doi":"10.2139/ssrn.4213345","DOIUrl":"https://doi.org/10.2139/ssrn.4213345","url":null,"abstract":"Abstract This paper investigates multistage taxes on firms in a limited tax capacity economy. We characterize the optimal taxation of informal firms reinterpreting behavioral and mechanical effects. Our numerical exercises highlight the relationship between misreporting costs and the elasticities of reported revenues and costs. We explore a tax reform in Brazil with a survey of informal firms to estimate these elasticities (0.55 and 0.94, respectively), which imply smaller sheltering costs for input expenditures. The optimal multistage tax system includes (i) differential linear taxes across the production chain and (ii) a positive, but very small, tax refund rate.","PeriodicalId":431854,"journal":{"name":"The B.E. Journal of Macroeconomics","volume":"157 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133798821","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This paper applies the Ramsey–Cass–Koopmans (RCK) growth model to an open economy so that, when calibrated with standard parameter values that are commonly used in the small open economy macroeconomic literature, the time paths of the model variables and the speeds of convergence implied by the model conform with empirical evidence. Open-economy versions of the RCK growth model lead to several counterfactual conclusions including: infinite speeds of convergence for physical capital and output; and unbalanced consumption and asset growth. We avoid these undesired results by extending the baseline model with human capital, international credit constraints, and finite horizons. Given its finite-horizons feature, our model allows us to study the growth implications of changes in life expectancy from the perspective of an open economy, as most of the existing theoretical-quantitative literature that focus on the relationship assumes a closed economy. The model predicts that increased life expectancy has positive but diminishing marginal effect on long-run output per capita. We find that, between 1960 and 2018, improvements in average life expectancy at birth raised long-run output per capita in sub-Saharan Africa, the OECD region, and Canada by an estimated 57.49 %, 14.94 %, and 11.58 %, respectively. In addition, if average life expectancy at birth in sub-Saharan African countries converges from its current level to the level in their OECD counterparts, the region’s long-run output per capita will increase by an estimated 22.89 %.
{"title":"Open Economy Neoclassical Growth Models and the Role of Life Expectancy","authors":"Tselmuun Tserenkhuu, Stephen Kosempel","doi":"10.1515/bejm-2022-0163","DOIUrl":"https://doi.org/10.1515/bejm-2022-0163","url":null,"abstract":"Abstract This paper applies the Ramsey–Cass–Koopmans (RCK) growth model to an open economy so that, when calibrated with standard parameter values that are commonly used in the small open economy macroeconomic literature, the time paths of the model variables and the speeds of convergence implied by the model conform with empirical evidence. Open-economy versions of the RCK growth model lead to several counterfactual conclusions including: infinite speeds of convergence for physical capital and output; and unbalanced consumption and asset growth. We avoid these undesired results by extending the baseline model with human capital, international credit constraints, and finite horizons. Given its finite-horizons feature, our model allows us to study the growth implications of changes in life expectancy from the perspective of an open economy, as most of the existing theoretical-quantitative literature that focus on the relationship assumes a closed economy. The model predicts that increased life expectancy has positive but diminishing marginal effect on long-run output per capita. We find that, between 1960 and 2018, improvements in average life expectancy at birth raised long-run output per capita in sub-Saharan Africa, the OECD region, and Canada by an estimated 57.49 %, 14.94 %, and 11.58 %, respectively. In addition, if average life expectancy at birth in sub-Saharan African countries converges from its current level to the level in their OECD counterparts, the region’s long-run output per capita will increase by an estimated 22.89 %.","PeriodicalId":431854,"journal":{"name":"The B.E. Journal of Macroeconomics","volume":"40 6","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132400163","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Ranpati Dewage Thilini Sumudu Kumari, Shawn Xiaoguang Chen, S. Tang
Abstract Un-incorporated firms are usually found less productive than their incorporated counterparts. However, little is known about the misallocation conditional on firms’ incorporation status and their productivity. This paper investigates the resource misallocation across un-incorporated firms and gauges the consequent aggregate productivity loss in comparison with their incorporated counterparts. We examine the question by using firm-level survey data from Sri Lanka’s manufacturing sector for 2005–2017 that provide unique information about firms’ corporation status. Our findings suggest that misallocation is more severe in unincorporated firms than in incorporated ones, leading to extra 42 % aggregate TFP loss to the former. By comparing the sources of misallocation between the two types of firms, we find capital is more misallocated relative to output and there is a stronger positive correlation between firm-specific distortion and productivity across the unincorporated firms. Our findings suggest that the un-incorporated firms suffer additional productivity loss at the aggregate level due to misallocation.
{"title":"Un-Incorporation and Conditional Misallocation: Firm-Level Evidence from Sri Lanka","authors":"Ranpati Dewage Thilini Sumudu Kumari, Shawn Xiaoguang Chen, S. Tang","doi":"10.1515/bejm-2022-0107","DOIUrl":"https://doi.org/10.1515/bejm-2022-0107","url":null,"abstract":"Abstract Un-incorporated firms are usually found less productive than their incorporated counterparts. However, little is known about the misallocation conditional on firms’ incorporation status and their productivity. This paper investigates the resource misallocation across un-incorporated firms and gauges the consequent aggregate productivity loss in comparison with their incorporated counterparts. We examine the question by using firm-level survey data from Sri Lanka’s manufacturing sector for 2005–2017 that provide unique information about firms’ corporation status. Our findings suggest that misallocation is more severe in unincorporated firms than in incorporated ones, leading to extra 42 % aggregate TFP loss to the former. By comparing the sources of misallocation between the two types of firms, we find capital is more misallocated relative to output and there is a stronger positive correlation between firm-specific distortion and productivity across the unincorporated firms. Our findings suggest that the un-incorporated firms suffer additional productivity loss at the aggregate level due to misallocation.","PeriodicalId":431854,"journal":{"name":"The B.E. Journal of Macroeconomics","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127012295","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract I investigate whether wealth inequality hinders the discovery of novel technologies in a competitive screening model. Agents can engage in exploration, which may lead to the discovery of superior technologies, but it is likely to waste time with inferior ones. Talented agents are better at weeding out inferior technologies, but talent is unobservable by lenders. When agents are poor, this causes an adverse selection problem whereby exploration is pursued by untalented agents rather than by talented ones. As economies become wealthier, the misallocation problem of talented agents weakens. Higher inequality worsens this misallocation problem when the economy is wealthy, but can increase efficiency in poor economies.
{"title":"Wealth Inequality and the Exploration of Novel Technologies","authors":"A. Spiganti","doi":"10.1515/bejm-2022-0073","DOIUrl":"https://doi.org/10.1515/bejm-2022-0073","url":null,"abstract":"Abstract I investigate whether wealth inequality hinders the discovery of novel technologies in a competitive screening model. Agents can engage in exploration, which may lead to the discovery of superior technologies, but it is likely to waste time with inferior ones. Talented agents are better at weeding out inferior technologies, but talent is unobservable by lenders. When agents are poor, this causes an adverse selection problem whereby exploration is pursued by untalented agents rather than by talented ones. As economies become wealthier, the misallocation problem of talented agents weakens. Higher inequality worsens this misallocation problem when the economy is wealthy, but can increase efficiency in poor economies.","PeriodicalId":431854,"journal":{"name":"The B.E. Journal of Macroeconomics","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126806800","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This paper evaluates the roles of short- and long-term private and government interest rates and inside and outside money in the monetary transmission mechanism. With money and credit markets present, changes in monetary policy set off a chain of relative price and portfolio adjustments affecting output and prices. I study interest rate and money supply rules within this monetary transmission mechanism by estimating several Markov-switching Bayesian vector autoregressions (MS-BVARs) on a quarterly U.S. sample from 1960 to 2018. The best-fit MS-BVAR restricts MS to the impact and lag coefficients of the monetary policy and money demand regressions as well as to the stochastic volatilities (SVs) of the structural shocks. Estimates of this MS-BVAR yield evidence of a SV regime which coincides with NBER-dated recessions. This MS-BVAR also identifies a regime switch in the Fed’s interest rate rule and banks’ demand for outside money around the dot-com bust of 2000 and again from the 2007–2009 recession and financial crisis to the end of the sample. Counterfactual simulations show the 2007–2009 recession and financial crisis would have not been as deep and long-lasting if the fed funds rate had been as low as −8 % in 2009 and remained negative from 2010 through 2016.
{"title":"Interest Rates, Money, and Fed Monetary Policy in a Markov-Switching Bayesian VAR","authors":"Kenneth M. Rich","doi":"10.1515/bejm-2022-0072","DOIUrl":"https://doi.org/10.1515/bejm-2022-0072","url":null,"abstract":"Abstract This paper evaluates the roles of short- and long-term private and government interest rates and inside and outside money in the monetary transmission mechanism. With money and credit markets present, changes in monetary policy set off a chain of relative price and portfolio adjustments affecting output and prices. I study interest rate and money supply rules within this monetary transmission mechanism by estimating several Markov-switching Bayesian vector autoregressions (MS-BVARs) on a quarterly U.S. sample from 1960 to 2018. The best-fit MS-BVAR restricts MS to the impact and lag coefficients of the monetary policy and money demand regressions as well as to the stochastic volatilities (SVs) of the structural shocks. Estimates of this MS-BVAR yield evidence of a SV regime which coincides with NBER-dated recessions. This MS-BVAR also identifies a regime switch in the Fed’s interest rate rule and banks’ demand for outside money around the dot-com bust of 2000 and again from the 2007–2009 recession and financial crisis to the end of the sample. Counterfactual simulations show the 2007–2009 recession and financial crisis would have not been as deep and long-lasting if the fed funds rate had been as low as −8 % in 2009 and remained negative from 2010 through 2016.","PeriodicalId":431854,"journal":{"name":"The B.E. Journal of Macroeconomics","volume":"20 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125041840","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This paper studies how adaptive learning affects the interactions between monetary policy, stock prices and the optimal degree of Rogoff conservatism in a New Keynesian DSGE model with non-Ricardian agents whose heterogeneous portfolios generate a financial wealth channel of monetary transmission. A positive intergenerational portfolio turnover in the stock market could improve the dual-mandate central bank’s intertemporal trade-off allowed by learning and implies a positive weight on financial stability in the social welfare criterion. For plausible learning gains and turnover rates, a rise in the turnover rate could lead the central bank to reduce the aggressiveness in its policy needed to manage private beliefs if the learning gain is high enough. Both the distortion due to learning and the central bank’s lack of concern for financial stability could lead the government to appoint a liberal central banker, i.e. less conservative than society. A rise in the turnover rate implies a higher (lower) degree of liberalism for low (high) learning gains.
{"title":"Learning, Central Bank Conservatism, and Stock Price Dynamics","authors":"M. André, Meixing Dai","doi":"10.1515/bejm-2020-0243","DOIUrl":"https://doi.org/10.1515/bejm-2020-0243","url":null,"abstract":"Abstract This paper studies how adaptive learning affects the interactions between monetary policy, stock prices and the optimal degree of Rogoff conservatism in a New Keynesian DSGE model with non-Ricardian agents whose heterogeneous portfolios generate a financial wealth channel of monetary transmission. A positive intergenerational portfolio turnover in the stock market could improve the dual-mandate central bank’s intertemporal trade-off allowed by learning and implies a positive weight on financial stability in the social welfare criterion. For plausible learning gains and turnover rates, a rise in the turnover rate could lead the central bank to reduce the aggressiveness in its policy needed to manage private beliefs if the learning gain is high enough. Both the distortion due to learning and the central bank’s lack of concern for financial stability could lead the government to appoint a liberal central banker, i.e. less conservative than society. A rise in the turnover rate implies a higher (lower) degree of liberalism for low (high) learning gains.","PeriodicalId":431854,"journal":{"name":"The B.E. Journal of Macroeconomics","volume":"41 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-03-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132148638","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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