a column by Francesco D'Acunto, Ulrike Malmendier and Michael Weber for VOX: CEPR’s Policy Portal
Policymakers seek to manage inflation expectations, but we understand little about how households form and update their expectations of inflation.
The column tests Lucas's conjecture that the price changes households observe, rather than all price changes, drive expectations. A measure of individual household consumption weighted by the frequency of purchase is a statistically and economically significant driver of households' expectations.
This challenges the modelling assumptions that central bank policymakers currently make.
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Showing posts with label central_bank. Show all posts
Showing posts with label central_bank. Show all posts
Friday, 22 November 2019
Thursday, 25 April 2019
Greening monetary policy
a column by Dirk Schoenmaker for VOX: CEPR’s Policy Portal
The ECB’s market-neutral approach to monetary policy undermines the general aim of the EU to achieve a low-carbon economy.
The column argues that steering the allocation of the Eurosystem’s assets and collateral towards low-carbon sectors would reduce the cost of capital for these sectors relative to high-carbon sectors. A modest titling approach could accelerate a transition to a low-carbon economy, and could be implemented without interfering with the priority of price stability.
Continue reading
The ECB’s market-neutral approach to monetary policy undermines the general aim of the EU to achieve a low-carbon economy.
The column argues that steering the allocation of the Eurosystem’s assets and collateral towards low-carbon sectors would reduce the cost of capital for these sectors relative to high-carbon sectors. A modest titling approach could accelerate a transition to a low-carbon economy, and could be implemented without interfering with the priority of price stability.
Continue reading
Monday, 14 January 2019
The powers and pitfalls of quantitative easing
a column by Wei Cui and Vincent Sterk for VOX: CEPR’s Policy Portal
The effects of quantitative easing are poorly understood, in part because standard models of monetary policy predict that it doesn't work.
This column uses a model in which households can be unequal and hold assets with different degrees of liquidity to show that quantitative easing can provide a powerful stimulus to the macroeconomy, and that it avoided a large decline in output and inflation during 2009.
Nevertheless, side-effects on inequality mean that social welfare tends to be lower under quantitative easing than under conventional policy.
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I still don’t understand what is being talked about and I feel that I should.
The effects of quantitative easing are poorly understood, in part because standard models of monetary policy predict that it doesn't work.
This column uses a model in which households can be unequal and hold assets with different degrees of liquidity to show that quantitative easing can provide a powerful stimulus to the macroeconomy, and that it avoided a large decline in output and inflation during 2009.
Nevertheless, side-effects on inequality mean that social welfare tends to be lower under quantitative easing than under conventional policy.
Continue reading
I still don’t understand what is being talked about and I feel that I should.
Saturday, 21 October 2017
The benefits of central bank digital currency
a column by Michael Bordo and Andrew Levin for VOX: CEPR’s Policy Portal
Central banks across the world are considering sovereign digital currencies. This column argues that these currencies could transform all aspects of the monetary system and facilitate the systematic and transparent conduct of monetary policy. In particular, a central bank digital currency can serve as a practically costless medium of exchange, a secure store of value, and a stable unit of account. To achieve this, the currency would be account based and interest bearing, and the monetary policy framework would target true price stability.
Continue reading
Central banks across the world are considering sovereign digital currencies. This column argues that these currencies could transform all aspects of the monetary system and facilitate the systematic and transparent conduct of monetary policy. In particular, a central bank digital currency can serve as a practically costless medium of exchange, a secure store of value, and a stable unit of account. To achieve this, the currency would be account based and interest bearing, and the monetary policy framework would target true price stability.
Continue reading
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