Pub Date : 2025-03-26DOI: 10.1016/j.jmoneco.2025.103768
Pierpaolo Benigno , Salvatore Nisticò
The economics of helicopter money is fundamentally tied to price-level determination in monetary models. In frameworks with intrinsically worthless currencies, the issuer’s liabilities define the unit of account, and uniquely empower the issuer to implement helicopter money and escape liquidity traps. While traditional helicopter money requires cooperation between the treasury and the central bank — with the central bank critically guaranteeing treasury debt — we demonstrate that helicopter money can also be effectively executed independently by government or private currency issuers, without treasury involvement.
{"title":"The economics of helicopter money","authors":"Pierpaolo Benigno , Salvatore Nisticò","doi":"10.1016/j.jmoneco.2025.103768","DOIUrl":"10.1016/j.jmoneco.2025.103768","url":null,"abstract":"<div><div>The economics of helicopter money is fundamentally tied to price-level determination in monetary models. In frameworks with intrinsically worthless currencies, the issuer’s liabilities define the unit of account, and uniquely empower the issuer to implement helicopter money and escape liquidity traps. While traditional helicopter money requires cooperation between the treasury and the central bank — with the central bank critically guaranteeing treasury debt — we demonstrate that helicopter money can also be effectively executed independently by government or private currency issuers, without treasury involvement.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"152 ","pages":"Article 103768"},"PeriodicalIF":4.3,"publicationDate":"2025-03-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144070593","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-14DOI: 10.1016/j.jmoneco.2025.103766
Stéphane Dupraz , Emi Nakamura , Jón Steinsson
In standard models, economic activity fluctuates symmetrically around a “natural rate” and stabilization policies can dampen these fluctuations but do not affect the average level of activity. An alternative view – labeled the “plucking model” by Milton Friedman – is that economic fluctuations are drops below the economy’s full potential ceiling. We show that the dynamics of the unemployment rate in the US display a striking asymmetry that strongly favors the plucking model: increases in unemployment are followed by decreases of similar amplitude, while the amplitude of a decrease does not predict the amplitude of the following increase. In addition, business cycles last seven years on average and unemployment rises much faster during recessions than it falls during expansions. We augment a standard labor search model with downward nominal wage rigidity and show how it can fit the plucking property.
{"title":"A plucking model of business cycles","authors":"Stéphane Dupraz , Emi Nakamura , Jón Steinsson","doi":"10.1016/j.jmoneco.2025.103766","DOIUrl":"10.1016/j.jmoneco.2025.103766","url":null,"abstract":"<div><div>In standard models, economic activity fluctuates symmetrically around a “natural rate” and stabilization policies can dampen these fluctuations but do not affect the average level of activity. An alternative view – labeled the “plucking model” by Milton Friedman – is that economic fluctuations are drops below the economy’s full potential ceiling. We show that the dynamics of the unemployment rate in the US display a striking asymmetry that strongly favors the plucking model: increases in unemployment are followed by decreases of similar amplitude, while the amplitude of a decrease does not predict the amplitude of the following increase. In addition, business cycles last seven years on average and unemployment rises much faster during recessions than it falls during expansions. We augment a standard labor search model with downward nominal wage rigidity and show how it can fit the plucking property.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"152 ","pages":"Article 103766"},"PeriodicalIF":4.3,"publicationDate":"2025-03-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144070667","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-07DOI: 10.1016/j.jmoneco.2025.103765
Nina Boyarchenko , Richard K. Crump , Anna Kovner , Or Shachar
We link bond market functioning to future economic activity through a new measure, the Corporate Bond Market Distress Index (CMDI). The CMDI coalesces metrics from primary and secondary markets in real time, offering a unified measure to capture access to debt capital markets. The index correctly identifies periods of distress and predicts future realizations of commonly-used measures of market functioning, while the converse is not the case. We show that disruptions in access to corporate bond markets have an economically material, statistically significant impact on the real economy, even after controlling for standard predictors including credit spreads.
{"title":"Corporate bond market distress","authors":"Nina Boyarchenko , Richard K. Crump , Anna Kovner , Or Shachar","doi":"10.1016/j.jmoneco.2025.103765","DOIUrl":"10.1016/j.jmoneco.2025.103765","url":null,"abstract":"<div><div>We link bond market functioning to future economic activity through a new measure, the Corporate Bond Market Distress Index (CMDI). The CMDI coalesces metrics from primary and secondary markets in real time, offering a unified measure to capture access to debt capital markets. The index correctly identifies periods of distress and predicts future realizations of commonly-used measures of market functioning, while the converse is not the case. We show that disruptions in access to corporate bond markets have an economically material, statistically significant impact on the real economy, even after controlling for standard predictors including credit spreads.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"152 ","pages":"Article 103765"},"PeriodicalIF":4.3,"publicationDate":"2025-03-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144070665","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-06DOI: 10.1016/j.jmoneco.2025.103764
Jungsuk Han , Yenan Wang
We analyze a model of heterogeneous rational bubbles that compete and complement each other. When some bubbles burst, surviving ones gain value, offsetting losses from collapsed bubbles. This “compensation effect,” combined with diversification, enhances welfare. A portfolio of fragile bubbles may rival a single, stable bubble. The stationary equilibrium imposes a tight upper bound on bubble size, considering covariance structures, price fluctuations, and the emergence of new bubbles. These results have important policy implications, particularly for managing crypto ETFs and issuing CBDCs, highlighting the potential benefits of a diversified approach to fragile financial systems.
{"title":"All that glitters: A theory of multiple bubbles with implications for cryptocurrencies","authors":"Jungsuk Han , Yenan Wang","doi":"10.1016/j.jmoneco.2025.103764","DOIUrl":"10.1016/j.jmoneco.2025.103764","url":null,"abstract":"<div><div>We analyze a model of heterogeneous rational bubbles that compete and complement each other. When some bubbles burst, surviving ones gain value, offsetting losses from collapsed bubbles. This “compensation effect,” combined with diversification, enhances welfare. A portfolio of fragile bubbles may rival a single, stable bubble. The stationary equilibrium imposes a tight upper bound on bubble size, considering covariance structures, price fluctuations, and the emergence of new bubbles. These results have important policy implications, particularly for managing crypto ETFs and issuing CBDCs, highlighting the potential benefits of a diversified approach to fragile financial systems.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"152 ","pages":"Article 103764"},"PeriodicalIF":4.3,"publicationDate":"2025-03-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144070664","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-12DOI: 10.1016/j.jmoneco.2025.103759
Alexandre N. Kohlhas , Donald Robertson
This paper develops a tractable theory of cautious expectations. We impose the constraint that agents have to estimate the optimal weight on information in an otherwise standard class of linear quadratic economies. Within this framework, we show that expectations optimally feature dampened responses to new and prior information. Our theory has several similarities to models of limited attention. However, our theory is crucially consistent with the broad-based predictability of forecast errors and biased, overreactive expectations that have otherwise called into question attention-based models. We illustrate the consequences of our framework in a standard consumption–savings problem, which shows that cautious expectations can help account for empirical evidence on the marginal propensity to consume and amplify precautionary savings.
{"title":"Cautious expectations","authors":"Alexandre N. Kohlhas , Donald Robertson","doi":"10.1016/j.jmoneco.2025.103759","DOIUrl":"10.1016/j.jmoneco.2025.103759","url":null,"abstract":"<div><div>This paper develops a tractable theory of cautious expectations. We impose the constraint that agents have to estimate the optimal weight on information in an otherwise standard class of linear quadratic economies. Within this framework, we show that expectations optimally feature dampened responses to new and prior information. Our theory has several similarities to models of limited attention. However, our theory is crucially consistent with the broad-based predictability of forecast errors and biased, overreactive expectations that have otherwise called into question attention-based models. We illustrate the consequences of our framework in a standard consumption–savings problem, which shows that cautious expectations can help account for empirical evidence on the marginal propensity to consume and amplify precautionary savings.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"155 ","pages":"Article 103759"},"PeriodicalIF":4.1,"publicationDate":"2025-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145333506","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-15DOI: 10.1016/j.jmoneco.2025.103744
Veronica Guerrieri
{"title":"Discussion of “Shaping Inequality and Intergenerational Persistence of Poverty: Free college or better schools”","authors":"Veronica Guerrieri","doi":"10.1016/j.jmoneco.2025.103744","DOIUrl":"10.1016/j.jmoneco.2025.103744","url":null,"abstract":"","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"150 ","pages":"Article 103744"},"PeriodicalIF":4.3,"publicationDate":"2025-01-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143372837","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-11DOI: 10.1016/j.jmoneco.2025.103731
Alessandra Fogli
{"title":"Discussion of “Joint Search Over the Life Cycle”","authors":"Alessandra Fogli","doi":"10.1016/j.jmoneco.2025.103731","DOIUrl":"10.1016/j.jmoneco.2025.103731","url":null,"abstract":"","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"150 ","pages":"Article 103731"},"PeriodicalIF":4.3,"publicationDate":"2025-01-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143372262","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.jmoneco.2024.103722
James Cloyne , Ezgi Kurt , Paolo Surico
Goods producers increase their capital expenditure and employment in response to a cut in marginal corporate income tax rates or an increase in investment tax credits. In contrast, companies in the service sector mostly use any tax windfall to increase dividend payouts. We base our conclusions on a novel measure of U.S. firm-specific tax shocks that combines changes in statutory tax rates faced by each firm with narrative identified legislated U.S. federal tax changes between 1950 and 2006.
{"title":"Who gains from corporate tax cuts?","authors":"James Cloyne , Ezgi Kurt , Paolo Surico","doi":"10.1016/j.jmoneco.2024.103722","DOIUrl":"10.1016/j.jmoneco.2024.103722","url":null,"abstract":"<div><div>Goods producers increase their capital expenditure and employment in response to a cut in marginal corporate income tax rates or an increase in investment tax credits. In contrast, companies in the service sector mostly use any tax windfall to increase dividend payouts. We base our conclusions on a novel measure of U.S. firm-specific tax shocks that combines changes in statutory tax rates faced by each firm with narrative identified legislated U.S. federal tax changes between 1950 and 2006.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"149 ","pages":"Article 103722"},"PeriodicalIF":4.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143156354","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.jmoneco.2024.103676
Pedro Bento
The number of women-owned businesses in the U.S. has soared over the last several decades. In 1982 less than 13 percent of businesses were majority-owned by women. By 2012 this number reached 40 percent. This and other evidence suggests that women have faced significant barriers to running businesses. Interpreted through the lens of a model of entrepreneurship, observed trends imply substantial declines in several barriers facing female entrepreneurs. Together, these changes account for almost 4 percent of observed growth in aggregate output and a 3 percent increase in workers’ consumption-equivalent welfare since 1982. By 2012, lower barriers increased the welfare of female entrepreneurs by a dramatic 116 percent, while lowering the welfare of male entrepreneurs by 5 percent. These impacts are in addition to any gains to workers from declining labor-market barriers.
{"title":"Female entrepreneurship in the U.S. 1982–2012: Implications for welfare and aggregate output","authors":"Pedro Bento","doi":"10.1016/j.jmoneco.2024.103676","DOIUrl":"10.1016/j.jmoneco.2024.103676","url":null,"abstract":"<div><div>The number of women-owned businesses in the U.S. has soared over the last several decades. In 1982 less than 13 percent of businesses were majority-owned by women. By 2012 this number reached 40 percent. This and other evidence suggests that women have faced significant barriers to running businesses. Interpreted through the lens of a model of entrepreneurship, observed trends imply substantial declines in several barriers facing female entrepreneurs. Together, these changes account for almost 4 percent of observed growth in aggregate output and a 3 percent increase in workers’ consumption-equivalent welfare since 1982. By 2012, lower barriers increased the welfare of female entrepreneurs by a dramatic 116 percent, while lowering the welfare of male entrepreneurs by 5 percent. These impacts are in addition to any gains to workers from declining labor-market barriers.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"149 ","pages":"Article 103676"},"PeriodicalIF":4.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142177706","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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