Journal of Macroeconomics最新文献

By constructing a two-country model with asymmetry in price-setting behavior between home and foreign intermediate goods firms, vertical production and trade, and endogenous entry of three types of final goods firms, this paper examines the effects of a home government spending shock. In particular, it focuses on the role of asymmetry in price-setting behavior between home and foreign intermediate goods firms. A home government spending shock is shown to result in the entry of multinational firms from both countries, an increase in the aggregate outputs of both countries, a deterioration in home welfare, and an improvement in foreign welfare. In addition, with an increase in the ratio of home and/or foreign intermediate goods firms setting their export prices in the local currency, the effects of this shock on the entry of home multinational firms, the increase in aggregate foreign output, the deterioration in home welfare and the improvement in foreign welfare are shown to be weakened, while the effects of this shock on the entry of foreign multinational firms and the increase in aggregate home output are intensified.

This study presents an analytical framework to investigate the use of reserve requirements as an indirect instrument to manage CBDC flows in an environment with significantly positive rates. This would complement two other possible instruments: hard limits, whose sole use may raise some concerns, and CBDC remuneration, which in a positive rate environment is not considered a viable option. As in the case of emerging market economies with a flexible exchange rate, in a CBDC framework reserve requirements could be used as a countercyclical tool for macroeconomic stabilization to influence bank lending/funding conditions consistently with the monetary policy stance. In an ample-reserves regime, the effectiveness of this tool would be favored by retaining the interest rate on required reserves and the interest rate on excess reserves (the real key policy rate) as two distinct policy instruments, with the former remaining stable below the latter.

This paper identifies supply and demand curves for bank reserves and a Divisia aggregate of monetary services within a structural vector autoregressive time-series model. Estimated over four sample periods spanning 1967 through 2020, the model illustrates how monetary policy actions can be interpreted with reference to their initial impact on bank reserves and the federal funds rate and their subsequent effects on Divisia money, nominal consumption spending, the aggregate nominal price level, and the unemployment rate. Model estimates attribute strong inflationary effects to monetary policy in the late 1960s and 1970s and also show that changes in the supply of reserves associated with the Fed's large-scale asset purchases since 2008 worked, as intended, to offset deflationary pressures and reduce unemployment. The model describes a much richer monetary policy process than one focused on interest rates alone.

This paper provides a new insight into the price puzzle using a new Keynesian (NK) model with household heterogeneity. To do this, we adopt a tractable heterogeneous-agent NK (THANK) model that nests the two-agent NK (TANK) and representative-agent NK models. We first demonstrate that when the share of liquidity-constrained (LC) consumers is high, the degree of inflation stabilization in the Taylor rule crucially affects whether the price puzzle occurs in the TANK model. Second, we show that regardless of the share of LC consumers, the price puzzle disappears in the THANK model with a discounted dynamic IS (DIS) curve. In contrast, for a compounded DIS curve, a higher share of LC consumers generates the price puzzle. Finally, we find that even in the case of a compounded DIS curve, reinforced interest rate smoothing can prevent the price puzzle.

Why are balance of payments crises, characterized by Sudden Stops of capital inflows, more frequent in emerging economies than advanced economies? This paper argues that differences in the composition of the financial account flows explain 30 percent of the gap in the probability of a crisis. I document that although advanced economies have, on average, zero net foreign direct investment (FDI), they have sufficient FDI outflows to act as buffer savings during financial distress. To quantify the effect of this FDI channel on the probability of a crisis, I propose a small open economy model with a loan-to-value collateral constraint and FDI vulnerable to government confiscation risk. The calibrated model suggests that if an emerging economy increases its capital-to-GDP ratio and eliminates government confiscation risk, it would reduce the probability of a Sudden Stop from 2.9 to 2.7 percent, while simultaneously increasing its debt-to-GDP ratio from 47 to 65 percent.

How does the interaction between inequality and social mobility affect the choice of fiscal policy? I analyze this question in a model of democratic politics with imperfect tax enforcement, where the ability of individuals to evade taxes limits the amount of redistribution in the economy. Social mobility creates an insurance motive that increases voluntary compliance, favoring the tax enforcement process. In such an environment, redistributive pressures brought about by an increase in inequality are only implementable in highly mobile societies. On the contrary, when mobility is low, higher inequality reduces tax rates and does not translate into higher redistribution. Descriptive evidence based on a sample of 71 countries for the period 1980–2015 shows correlations among inequality, mobility and redistribution in line with the predictions of the model.

I introduce a tax shock into a “standard” heterogeneous agent model in continuous time (HACT) to quantify the effect of an income tax on inequality. I find that an income tax, collecting 15% of output, reduces the Gini coefficient by up to 16.9% in an economy with a perfect credit market and up to 24.3% in financial autarky. The tax has a modest effect on production labor income inequality, reduces inequality in entrepreneurial income under financial autarky, but raises it when entrepreneurs operate in a perfect credit market. I also explore the effect of the tax on other well-known income inequality measures discussed in the literature.

This paper empirically studies the U.S. multiplier effects of government investment, government consumption and total government purchases on output. We explore dependencies of the multipliers on states of the economy, measured in different ways. Using local projections with instrumental variables, we find that a model without state-dependencies and using total government spending (instead of its components) provides the best fit to post-WWII data. These results are robust to various alternative specifications. We account for the COVID-19 period with a pandemic stringency index and for monetary policy shocks with a shadow interest rate. The government spending multiplier is approximately 0.5.

This study examines how redistributive policy that attempts to reduce inequality by taxing the bequests of the rich and redistributing the revenue to the poor affects economic growth in an overlapping generations model of R&D-based growth with both product development and process innovation. We show that such a policy simultaneously increases growth and reduces inequality in the long-run. When the market structure adjusts, partially reducing inequality in the short-run, the effect of redistributive policy on economic growth depends on the values of the social return to variety parameter. However, when the market structure adjusts fully in the longrun, the redistributive policy decreases the entry of new firms but raises economic growth and reduces inequality.

Declining institutional trust is one of the central problems in modern societies. Identifying its determinants, among which inequality, is fundamental for designing suitable interventions to restore confidence in institutions and preserve the social contract. We study the relationship between the two phenomena for EU-28 countries over the period 2003–2019. We use OLS and IV estimations to show that increasing income inequality is significantly associated with reduced trust in national governments. We also find that citizens’ digital interaction with the public administrations represents a mitigating channel as it contributes to shrinking the adverse effect of inequality on institutional trust, especially for more vulnerable categories in society, such as individuals with low educational attainment and those who are unemployed. These new insights might be particularly helpful for the government's agenda to meet transparency goals and provide more digital public services. From a policy viewpoint, redistribution policies combined with a well-established e-relationship between citizens and governments may be the road to restore trust in institutions.