Search Results
Speech
Classic Policy Benchmarks for Economies with Substantial Inequality
St. Louis Fed President Jim Bullard participated on a policy panel during the Annual Conference of the Central Bank of Chile. The topic of the conference was “Heterogeneity in Macroeconomics: Implications for Monetary Policy.”During the panel discussion, Bullard presented "Classic Policy Benchmarks for Economies with Substantial Inequality." In the presentation, he outlined an argument that the contribution of a central bank to optimal macroeconomic policy may not be importantly altered by the presence of heterogeneous households. (He has presented previous versions of these slides at ...
Journal Article
Closing the gap
Speech
\"Optimal Monetary Policy for the Masses: a presentation at the Center for Research on the Wisconsin Economy, University of Wisconsin-Madison, Madison, Wis.
In a presentation at the University of Wisconsin-Madison, St. Louis Fed President James Bullard highlighted his recent working paper, which examines whether monetary policy can be conducted in a way that benefits all households even in a world with substantial income, financial wealth and consumption inequality. In the paper, nominal GDP targeting constitutes ?optimal monetary policy for the masses,? he said.
Working Paper
Optimal Monetary Policy for the Masses
We study nominal GDP targeting as optimal monetary policy in a simple and stylized model with a credit market friction. The macroeconomy we studyhas considerable income inequality, which gives rise to a large private sector credit market. There is an important credit market friction because households participating in the credit market use non-state contingent nominal contracts (NSCNC). We extend previous results in this model by allowing for substantial intra-cohort heterogeneity. The heterogeneity is substantial enough that we can approach measured Gini coefficients for income, financial ...
Journal Article
Income differences around the globe go beyond physical, human capital
Differences in physical and human capital don't fully explain the staggering differences in living standards around the globe. The high cost of starting a new business and the difficulties in obtaining financing in some countries also are key factors.
Working Paper
Federal reserve forecasts: asymmetry and state-dependence
We jointly test the rationality of the Federal Reserve?s Greenbook forecasts of infiation, unemployment, and output growth using a multivariate nonseparable asymmetric loss function. We find that the forecasts are rationalizable and exhibit directional asymmetry. The degree of asymmetry depends on the phase of the business cycle: The Greenbook forecasts of output growth are too pessimistic in recessions and too optimistic in expansions. The change in monetary policy that occured in the late 1970s has been attributed in the literature to the Fed coming to terms with the difficulties in ...
Journal Article
Institutional causes of output volatility
The authors investigate the relationship between the quality of institutions and output volatility. Using instrumental variable regressions, they address whether higher entry barriers and lower property rights protection lead to higher volatility. They find that a 1-standard-deviation increase in entry costs increases the standard deviation of output growth by roughly 40 percent of its average value in the sample. In contrast, property rights protection has no statistically significant effect on volatility.
Journal Article
An estimated DSGE model for the United Kingdom
The authors estimate the dynamic stochastic general equilibrium model of Christiano, Eichenbaum, and Evans (2005) on U.K. data. Their estimates suggest that price stickiness is a more important source of nominal rigidity in the United Kingdom than wage stickiness. Their estimates of parameters governing investment behavior are only well behaved when post-1979 observations are included, which reflects government policies until the late 1970s that obstructed the influence of market forces on investment.