Pub Date : 2025-04-01DOI: 10.1016/j.jmoneco.2024.103728
Olivier Darmouni , Kerry Y. Siani
How do asset purchases by central banks transmit to the real economy? Using micro-data on corporate balance sheets, we study firm behavior after the unprecedented policy support to corporate bond markets in 2020. As bond yields fell, firms issued bonds to accumulate large and persistent amounts of liquid assets. The effect on real investment was generally weak: many issuers already had access to bank liquidity and maintained equity payouts, while others used bond funds to pay back bank debt. This evidence sheds light on how corporate liquidity and financial heterogeneity matter for the macro-economy and the transmission of unconventional monetary policy.
{"title":"Bond market stimulus: Firm-level evidence","authors":"Olivier Darmouni , Kerry Y. Siani","doi":"10.1016/j.jmoneco.2024.103728","DOIUrl":"10.1016/j.jmoneco.2024.103728","url":null,"abstract":"<div><div>How do asset purchases by central banks transmit to the real economy? Using micro-data on corporate balance sheets, we study firm behavior after the unprecedented policy support to corporate bond markets in 2020. As bond yields fell, firms issued bonds to accumulate large and persistent amounts of liquid assets. The effect on real investment was generally weak: many issuers already had access to bank liquidity and maintained equity payouts, while others used bond funds to pay back bank debt. This evidence sheds light on how corporate liquidity and financial heterogeneity matter for the macro-economy and the transmission of unconventional monetary policy.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"151 ","pages":"Article 103728"},"PeriodicalIF":4.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143783569","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 : 2025-04-01DOI: 10.1016/j.jmoneco.2025.103730
Le Xu , Yang Yu , Francesco Zanetti
We assemble a firm-level dataset to study the adoption and termination of suppliers over business cycles. We document that the aggregate number and rate of adoption of suppliers are procyclical. The rate of termination is acyclical at the aggregate level, and the cyclicality of termination encompasses large differences across producers. To account for these new facts, we develop a model with optimizing producers that incur separate costs for management, adoption, and termination of suppliers. These costs alter the incentives to scale up production and to replace existing with new suppliers. Sufficiently high convexity in management relative to adjustment costs is crucial to replicating the observed cyclicality in the adoption and termination rates at the producer and aggregate levels. We study the welfare implications of credit injections and subsidies on new inputs—the two main classes of supply-chain policies adopted in the U.S. since the COVID-19 pandemic. Credit injections generally outperform subsidies on new inputs, except when aggregate TFP is exceptionally high.
{"title":"The adoption and termination of suppliers over the business cycle","authors":"Le Xu , Yang Yu , Francesco Zanetti","doi":"10.1016/j.jmoneco.2025.103730","DOIUrl":"10.1016/j.jmoneco.2025.103730","url":null,"abstract":"<div><div>We assemble a firm-level dataset to study the adoption and termination of suppliers over business cycles. We document that the aggregate number and rate of adoption of suppliers are procyclical. The rate of termination is acyclical at the aggregate level, and the cyclicality of termination encompasses large differences across producers. To account for these new facts, we develop a model with optimizing producers that incur separate costs for management, adoption, and termination of suppliers. These costs alter the incentives to scale up production and to replace existing with new suppliers. Sufficiently high convexity in management relative to adjustment costs is crucial to replicating the observed cyclicality in the adoption and termination rates at the producer and aggregate levels. We study the welfare implications of credit injections and subsidies on new inputs—the two main classes of supply-chain policies adopted in the U.S. since the COVID-19 pandemic. Credit injections generally outperform subsidies on new inputs, except when aggregate TFP is exceptionally high.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"151 ","pages":"Article 103730"},"PeriodicalIF":4.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143783573","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 : 2025-04-01DOI: 10.1016/j.jmoneco.2025.103735
Miroslav Gabrovski , Athanasios Geromichalos , Lucas Herrenbrueck , Ioannis Kospentaris , Sukjoon Lee
A large literature in macroeconomics concludes that disruptions in financial markets have large negative effects on output and (un)employment. Though diverse, most papers in this literature share a common characteristic: they employ frameworks where money is not explicitly modeled. This paper argues that the omission of money may hinder a model’s ability to evaluate the real effects of financial shocks, since it deprives agents of a payment instrument that they could have used to cope with the resulting liquidity disruption. In a carefully calibrated New-Monetarist model with frictional labor, product, and financial markets, we show that the existence of money dampens or even nearly eliminates the real impact of financial shocks, depending on the nature of the shock. We also show that the propagation of financial shocks to the real economy depends on the inflation level: high inflation levels magnify the real effects of adverse financial shocks.
{"title":"The real effects of financial disruptions in a monetary economy","authors":"Miroslav Gabrovski , Athanasios Geromichalos , Lucas Herrenbrueck , Ioannis Kospentaris , Sukjoon Lee","doi":"10.1016/j.jmoneco.2025.103735","DOIUrl":"10.1016/j.jmoneco.2025.103735","url":null,"abstract":"<div><div>A large literature in macroeconomics concludes that disruptions in financial markets have large negative effects on output and (un)employment. Though diverse, most papers in this literature share a common characteristic: they employ frameworks where money is not explicitly modeled. This paper argues that the omission of money may hinder a model’s ability to evaluate the real effects of financial shocks, since it deprives agents of a payment instrument that they <em>could</em> have used to cope with the resulting liquidity disruption. In a carefully calibrated New-Monetarist model with frictional labor, product, and financial markets, we show that the existence of money dampens or even nearly eliminates the real impact of financial shocks, depending on the nature of the shock. We also show that the propagation of financial shocks to the real economy depends on the inflation level: high inflation levels magnify the real effects of adverse financial shocks.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"151 ","pages":"Article 103735"},"PeriodicalIF":4.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143783472","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 : 2025-04-01DOI: 10.1016/j.jmoneco.2025.103745
Barthélémy Bonadio , Zhen Huo , Andrei A. Levchenko , Nitya Pandalai-Nayar
We study the roles of globalization and structural change in the evolution of international GDP comovement over the period 1978–2007. In this period, trade integration between advanced economies increased rapidly while average GDP correlations remained stable. Structural change – reallocation of economic activity towards services – is important in resolving this apparent puzzle. Business cycle shocks in the service sector are less internationally correlated than in manufacturing, and thus structural change lowers GDP comovement by increasing the GDP share of less correlated sectors. Globalization – reductions in trade costs – exerts two opposing effects on international comovement. While greater trade linkages increase international transmission of shocks, globalization also induces structural change towards services. We quantify these effects in a multi-country, multi-sector model of international production and trade. The two opposing effects of globalization on comovement largely cancel each other out, limiting the net contribution of globalization to increasing international comovement.
{"title":"Globalization, structural change and international comovement","authors":"Barthélémy Bonadio , Zhen Huo , Andrei A. Levchenko , Nitya Pandalai-Nayar","doi":"10.1016/j.jmoneco.2025.103745","DOIUrl":"10.1016/j.jmoneco.2025.103745","url":null,"abstract":"<div><div>We study the roles of globalization and structural change in the evolution of international GDP comovement over the period 1978–2007. In this period, trade integration between advanced economies increased rapidly while average GDP correlations remained stable. Structural change – reallocation of economic activity towards services – is important in resolving this apparent puzzle. Business cycle shocks in the service sector are less internationally correlated than in manufacturing, and thus structural change lowers GDP comovement by increasing the GDP share of less correlated sectors. Globalization – reductions in trade costs – exerts two opposing effects on international comovement. While greater trade linkages increase international transmission of shocks, globalization also induces structural change towards services. We quantify these effects in a multi-country, multi-sector model of international production and trade. The two opposing effects of globalization on comovement largely cancel each other out, limiting the net contribution of globalization to increasing international comovement.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"151 ","pages":"Article 103745"},"PeriodicalIF":4.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143783473","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 : 2025-04-01DOI: 10.1016/j.jmoneco.2025.103734
Nicolò Gnocato
Does monetary policy face a trade-off between stabilizing inflation and unemployment as soaring energy prices hit the unemployed harder than the employed? Data from the euro-area Consumer Expectations Survey show that job losses not only force workers to lower their consumption but also to devote a higher proportion of it to energy. I incorporate this evidence into a tractable heterogeneous-agent New Keynesian model with labor market frictions, where energy acts as both a complementary input in production and a non-homothetic consumption good. Unemployment forces workers to consume less due to imperfect insurance and, since preferences are non-homothetic, to allocate a larger consumption share to energy. The heterogeneous exposure of the labor force to rising energy prices induces an endogenous trade-off for monetary policy: the optimal response involves partly accommodating inflation to limit the increase in unemployment and, hence, prevent workers from becoming more exposed to the shock.
{"title":"Energy price shocks, unemployment, and monetary policy","authors":"Nicolò Gnocato","doi":"10.1016/j.jmoneco.2025.103734","DOIUrl":"10.1016/j.jmoneco.2025.103734","url":null,"abstract":"<div><div>Does monetary policy face a trade-off between stabilizing inflation and unemployment as soaring energy prices hit the unemployed harder than the employed? Data from the euro-area Consumer Expectations Survey show that job losses not only force workers to lower their consumption but also to devote a higher proportion of it to energy. I incorporate this evidence into a tractable heterogeneous-agent New Keynesian model with labor market frictions, where energy acts as both a complementary input in production and a non-homothetic consumption good. Unemployment forces workers to consume less due to imperfect insurance and, since preferences are non-homothetic, to allocate a larger consumption share to energy. The heterogeneous exposure of the labor force to rising energy prices induces an endogenous trade-off for monetary policy: the optimal response involves partly accommodating inflation to limit the increase in unemployment and, hence, prevent workers from becoming more exposed to the shock.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"151 ","pages":"Article 103734"},"PeriodicalIF":4.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143783471","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 : 2025-04-01DOI: 10.1016/j.jmoneco.2025.103747
Conny Olovsson , Karl Walentin , Andreas Westermark
International immigration flows are large, volatile, and increasing. We document the dynamic implications of immigration, and account for the differential unemployment and labor force participation rates between immigrants and natives. To quantify the effects of immigration, we use Swedish population registry data and productivity estimates from a matched employer–employee dataset. A refugee (economic) immigration shock yields large initial negative (positive but delayed) effects on GDP per capita and employment rates, substantially larger than, but with the same sign as the corresponding steady state effects. This reflects the empirical fact that labor market integration is a gradual process over many years.
国际移民流动量大、不稳定且不断增加。我们记录了移民的动态影响，并解释了移民和本地人之间不同的失业率和劳动力参与率。为了量化移民的影响，我们使用了瑞典人口登记数据和来自匹配的雇主-雇员数据集的生产率估计值。难民（经济）移民冲击对人均 GDP 和就业率产生了巨大的初始负（正但延迟）效应，大大高于相应的稳态效应，但符号相同。这反映了劳动力市场一体化是一个多年的渐进过程这一经验事实。
{"title":"Dynamic macroeconomic implications of immigration","authors":"Conny Olovsson , Karl Walentin , Andreas Westermark","doi":"10.1016/j.jmoneco.2025.103747","DOIUrl":"10.1016/j.jmoneco.2025.103747","url":null,"abstract":"<div><div>International immigration flows are large, volatile, and increasing. We document the dynamic implications of immigration, and account for the differential unemployment and labor force participation rates between immigrants and natives. To quantify the effects of immigration, we use Swedish population registry data and productivity estimates from a matched employer–employee dataset. A refugee (economic) immigration shock yields large initial negative (positive but delayed) effects on GDP per capita and employment rates, substantially larger than, but with the same sign as the corresponding steady state effects. This reflects the empirical fact that labor market integration is a gradual process over many years.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"151 ","pages":"Article 103747"},"PeriodicalIF":4.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143783475","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 : 2025-04-01DOI: 10.1016/j.jmoneco.2025.103750
Seunghoon Na , Donghoon Yoo
We incorporate diagnostic expectations (DE) into small open economy (SOE) models to offer novel insights into business cycles, especially in emerging countries. DE induce overreactions in domestic absorption, leading to countercyclical external balances and endogenous boom-bust cycles driven by surprises rooted in distant memory. This framework offers a cognitive alternative to permanent income shock in conventional SOE models under rational expectations (RE). Using Argentine macro-international data, we estimate a quantitative SOE-RBC model with DE that captures the volatility and cyclicality specific to emerging countries and identifies diagnosticity levels consistent with prior research, and reduces reliance on trend-driven TFP shocks. Our findings highlight DE as an empirically plausible mechanism, enriching the literature by demonstrating how imperfect, memory-based expectations influence macroeconomic dynamics in an open economy context.
我们将诊断性预期（DE）纳入小型开放经济（SOE）模型，为商业周期，尤其是新兴国家的商业周期提供了新的见解。诊断性预期会引起国内吸收的过度反应，导致反周期的外部收支平衡，以及由根植于遥远记忆的意外所驱动的内生繁荣-萧条周期。这一框架为理性预期（RE）下的传统国有企业模型中的永久性收入冲击提供了一种认知替代方案。利用阿根廷的宏观国际数据，我们估算了一个带有 DE 的定量国有企业-RBC 模型，该模型捕捉了新兴国家特有的波动性和周期性，确定了与先前研究一致的诊断水平，并减少了对趋势驱动的全要素生产率冲击的依赖。我们的研究结果凸显了 DE 这一经验上合理的机制，通过展示不完美的、基于记忆的预期如何在开放经济背景下影响宏观经济动态，丰富了相关文献。
{"title":"Overreaction and macroeconomic fluctuation of the external balance","authors":"Seunghoon Na , Donghoon Yoo","doi":"10.1016/j.jmoneco.2025.103750","DOIUrl":"10.1016/j.jmoneco.2025.103750","url":null,"abstract":"<div><div>We incorporate diagnostic expectations (DE) into small open economy (SOE) models to offer novel insights into business cycles, especially in emerging countries. DE induce overreactions in domestic absorption, leading to countercyclical external balances and endogenous boom-bust cycles driven by surprises rooted in distant memory. This framework offers a cognitive alternative to permanent income shock in conventional SOE models under rational expectations (RE). Using Argentine macro-international data, we estimate a quantitative SOE-RBC model with DE that captures the volatility and cyclicality specific to emerging countries and identifies diagnosticity levels consistent with prior research, and reduces reliance on trend-driven TFP shocks. Our findings highlight DE as an empirically plausible mechanism, enriching the literature by demonstrating how imperfect, memory-based expectations influence macroeconomic dynamics in an open economy context.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"151 ","pages":"Article 103750"},"PeriodicalIF":4.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143783477","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 : 2025-04-01DOI: 10.1016/j.jmoneco.2024.103726
Stéphane Auray , Michael B. Devereux , Aurélien Eyquem
Countries have an incentive to use tariffs to gain advantage over trade partners, but an optimal tariff must weigh the benefits of an improved terms of trade against the costs that the tariff imposes on the domestic economy. In the presence of monopoly distortions and nominal rigidities, the stance of monetary policy may have a large effect on the evaluation of these costs. In a global economy where all countries set tariffs unilaterally in a ‘trade war’, the final outcome can differ dramatically depending on different monetary policy rules. We set out a model of a trade war in a New Keynesian open-economy model. For any one country, a tariff improves the terms of trade but is costly due to its deflationary effect on the domestic economy. A monetary rule which targets the CPI or stabilizes the nominal exchange rate exacerbates these latter costs, and leads to lower equilibrium tariff rates in a trade war. Furthermore, an optimally delegated monetary rule can in fact completely eliminate a trade war.
{"title":"Trade wars and the optimal design of monetary rules","authors":"Stéphane Auray , Michael B. Devereux , Aurélien Eyquem","doi":"10.1016/j.jmoneco.2024.103726","DOIUrl":"10.1016/j.jmoneco.2024.103726","url":null,"abstract":"<div><div>Countries have an incentive to use tariffs to gain advantage over trade partners, but an optimal tariff must weigh the benefits of an improved terms of trade against the costs that the tariff imposes on the domestic economy. In the presence of monopoly distortions and nominal rigidities, the stance of monetary policy may have a large effect on the evaluation of these costs. In a global economy where all countries set tariffs unilaterally in a ‘trade war’, the final outcome can differ dramatically depending on different monetary policy rules. We set out a model of a trade war in a New Keynesian open-economy model. For any one country, a tariff improves the terms of trade but is costly due to its deflationary effect on the domestic economy. A monetary rule which targets the CPI or stabilizes the nominal exchange rate exacerbates these latter costs, and leads to lower equilibrium tariff rates in a trade war. Furthermore, an optimally delegated monetary rule can in fact completely eliminate a trade war.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"151 ","pages":"Article 103726"},"PeriodicalIF":4.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143783568","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 : 2025-04-01DOI: 10.1016/j.jmoneco.2024.103729
Danilo Cascaldi-Garcia
Upon arrival of macroeconomic news, agents update their beliefs about the long-run fundamentals of the economy. I show that signals about agents’ expectations, proxied by professional forecasters’ outlook revisions, convey sufficient information to identify the effects of expected future technological changes, or news shocks. The approach benefits from not depending on an empirical technology measure or on assumptions about common trends and the timing of the technological change. News shocks cause a strong anticipation effect in investment, while there is less evidence of consumption smoothing—in line with news-driven business cycle models with financial frictions.
{"title":"Forecast revisions as instruments for news shocks","authors":"Danilo Cascaldi-Garcia","doi":"10.1016/j.jmoneco.2024.103729","DOIUrl":"10.1016/j.jmoneco.2024.103729","url":null,"abstract":"<div><div>Upon arrival of macroeconomic news, agents update their beliefs about the long-run fundamentals of the economy. I show that signals about agents’ expectations, proxied by professional forecasters’ outlook revisions, convey sufficient information to identify the effects of expected future technological changes, or news shocks. The approach benefits from not depending on an empirical technology measure or on assumptions about common trends and the timing of the technological change. News shocks cause a strong anticipation effect in investment, while there is less evidence of consumption smoothing—in line with news-driven business cycle models with financial frictions.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"151 ","pages":"Article 103729"},"PeriodicalIF":4.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143783572","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 : 2025-04-01DOI: 10.1016/j.jmoneco.2025.103732
Noah Kwicklis
When fiscal policy is active and monetary policy is passive in a heterogeneous agent New Keynesian (HANK) model, deficit-financed transfers to low-asset households lead to similar cumulative inflation but greater increases in real output than transfers to wealthier households. I use the inverse of the “Phillips multiplier”, the price level sacrifice ratio, to quantify this dynamic. Household heterogeneity and targeted policy change the timing of output gaps, making this consistent with the Phillips Curve and rendering conventional sacrifice ratio intuition misleading for assessing the inflation/output trade-off between policies.
{"title":"Active vs. passive policy and the trade-off between output and inflation in HANK","authors":"Noah Kwicklis","doi":"10.1016/j.jmoneco.2025.103732","DOIUrl":"10.1016/j.jmoneco.2025.103732","url":null,"abstract":"<div><div>When fiscal policy is active and monetary policy is passive in a heterogeneous agent New Keynesian (HANK) model, deficit-financed transfers to low-asset households lead to similar cumulative inflation but greater increases in real output than transfers to wealthier households. I use the inverse of the “Phillips multiplier”, the price level sacrifice ratio, to quantify this dynamic. Household heterogeneity and targeted policy change the timing of output gaps, making this consistent with the Phillips Curve and rendering conventional sacrifice ratio intuition misleading for assessing the inflation/output trade-off between policies.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"151 ","pages":"Article 103732"},"PeriodicalIF":4.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143783584","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}
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