The Negative Mean Output Gap

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The Negative Mean Output Gap

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Author : Mr.Shekhar Aiyar
language : en
Publisher: International Monetary Fund
Release Date : 2019-08-23

The Negative Mean Output Gap written by Mr.Shekhar Aiyar and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-08-23 with Business & Economics categories.

We argue that in an economy with downward nominal wage rigidity, the output gap is negative on average. Because it is more difficult to cut wages than to increase them, firms reduce employment more during downturns than they increase employment during expansions. This is demonstrated in a simple New Keynesian model with asymmetric wage adjustment costs. Using the model's output gap as a benchmark, we further show that common output gap estimation methods exhibit a systematic bias because they assume a zero mean. The bias is especially large in deep recessions when potential output tends to be most severely underestimated.

The Negative Mean Output Gap

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Author : Shekhar Aiyar
language : en
Publisher:
Release Date : 2019

The Negative Mean Output Gap written by Shekhar Aiyar and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with Electronic books categories.

We argue that in an economy with downward nominal wage rigidity, the output gap is negative on average. Because it is more difficult to cut wages than to increase them, firms reduce employment more during downturns than they increase employment during expansions. This is demonstrated in a simple New Keynesian model with asymmetric wage adjustment costs. Using the model's output gap as a benchmark, we further show that common output gap estimation methods exhibit a systematic bias because they assume a zero mean. The bias is especially large in deep recessions when potential output tends to be most severely underestimated.

How Informative Are Real Time Output Gap Estimates In Europe

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Author : Mr.Alvar Kangur
language : en
Publisher: International Monetary Fund
Release Date : 2019-09-20

How Informative Are Real Time Output Gap Estimates In Europe written by Mr.Alvar Kangur and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-09-20 with Business & Economics categories.

We study the properties of the IMF-WEO estimates of real-time output gaps for countries in the euro area as well as the determinants of their revisions over 1994-2017. The analysis shows that staff typically saw economies as operating below their potential. In real time, output gaps tend to have large and negative averages that are largely revised away in later vintages. Most of the mis-measurement in real time can be explained by the difficulty in predicting recessions and by overestimation of the economy’s potential capacity. We also find, in line with earlier literature, that real-time output gaps are not useful for predicting inflation. In addition, countries where slack (and potential growth) is overestimated to a larger extent primary fiscal balances tend to be lower and public debt ratios are higher and increase faster than projected. Previous research suggests that national authorities’ real-time output gaps suffer from a similar bias. To the extent these estimates play a role in calibrating fiscal policy, over-optimism about long-term growth could contribute to excessive deficits and debt buildup.

Output Gap Uncertainty And Fiscal Policy Adjustment In Real Time In Emerging Economies

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Author : Giacomo Cattelan
language : en
Publisher: International Monetary Fund
Release Date : 2024-12-13

Output Gap Uncertainty And Fiscal Policy Adjustment In Real Time In Emerging Economies written by Giacomo Cattelan and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-12-13 with categories.

Uncertainty around the real-time output gap has important implications for fiscal policy. This study uses successive vintages of the World Economic Outlook for emerging markets (EMs) during 1998-2022 to examine the reaction of discretionary fiscal policy to uncertain economic cycle in real-time. The findings show that EMs tend to have persistently negative and significantly more volatile real-time output gap estimates compared to advanced economies (AEs) and are less responsive to the output gap shocks. We calibrate a New Keynesian DSGE model to match the behavior of an average EM. The results from the model suggest that when EM policy makers are equally concerned about uncertainty around the output gap estimates and about fiscal implementation, fiscal policy is less counter-cyclical than the benchmark case with no uncertainty, entailing an efficiency loss for the purpose of output gap stabilization. On the other hand, when the concern is only about output gap uncertainty, EM policy makers tend to react more counter-cyclically but at a cost of public debt spiking in the short term and stabilizing over the long term. This implies that it might be optimal for EM policy makers to act more aggressively to stabilize the economy. We show that by adjusting the relative importance of output gap vs debt stabilization in their objective function, EM policy makers can achieve a similar outcome as in the benchmark case with no uncertainty.

Research On China S Monetary Policy System And Conduction Mechanism

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Author : Wei Liu
language : en
Publisher: Springer Nature
Release Date : 2023-03-28

Research On China S Monetary Policy System And Conduction Mechanism written by Wei Liu and has been published by Springer Nature this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023-03-28 with Business & Economics categories.

This book chooses four different transmission mechanisms of interest rate, credit, exchange rate, and asset price to study whether China’s monetary policy has an impact on these four transmission mechanisms and then studies whether these four transmission mechanisms have an impact on the macroeconomy, so as to determine the impact of China’s monetary policy on macro-goals.

Budget 2005

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Author : Great Britain. Treasury
language : en
Publisher: The Stationery Office
Release Date : 2005

Budget 2005 written by Great Britain. Treasury and has been published by The Stationery Office this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Business & Economics categories.

The Budget presents an updated assessment of the economy and public finances and reports on Government policies. It: shows that the economy is growing strongly and the Government is meeting its fiscal rules; announces a long-term investment programme for schools and sets out further measures to help young people develop skills; sets out reform to reduce the regulatory burden on business; announces free local travel for people over 60 and provide £200 towards the council tax bill for those over 65; makes a commitment to increase Child Tax Credit in line with earnings; doubles the threshold for stamp duty; increases the special reserve for military operations; announces a better targeted Local Enterprise Growth Initiative; introduces measures to modernise the tax system; defers any increase in fuel duty until September 2005.

Behavioural Macroeconomics

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Author : Paul De Grauwe
language : en
Publisher:
Release Date : 2019

Behavioural Macroeconomics written by Paul De Grauwe and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with Business & Economics categories.

Modern macroeconomics has been based on the paradigm of the rational individual capable of understanding the complexity of the world. This has created a very shallow theory of the business cycle in which nothing happens in the macroeconomy unless shocks occur from outside. Behavioural Macroeconomics: Theory and Policy uses a different paradigm. It assumes that individual agents experience cognitive limitations preventing them from having rational expectations. Instead these individuals use simple rules of behaviour. Behavioural Macroeconomics introduces rationality by allowing individuals to learn from their mistakes and to switch to the rules that perform better. It introduces the idea of endogenously generated "animals spirits" that drive the business cycle and are in turn influenced by it, and applies this model to shed new light on a number of important issues. It analyses the role of fiscal policy in stabilizing the economy while maintaining debt sustainability; expands the model to include a banking sector and show how banks amplify the booms and busts; and explains how animal spirits help to synchronize the business cycles across countries. The model set out in Behavioural Macroeconomics leads to very different policy implications from the mainstream macroeconomic model. It shows how policymakers have a responsibility to stabilize an otherwise unstable system.

Macroeconomics

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Author : Michael Burda
language : en
Publisher: Oxford University Press
Release Date : 2022

Macroeconomics written by Michael Burda and has been published by Oxford University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with Business & Economics categories.

Responding to the most recent global challenges by analysing data from new events, and developing new policy examples, the eighth edition of Macroeconomics: A European Text continues to provide a comprehensive and modern analysis of macroeconomic theories. While retaining their focus on those features that characterise the European economy, the authors explore matters surrounding the global financial crisis, the European debt crisis, and the most recent effects of the Covid-19 pandemic on both labour supply and consumption. Students are supported throughout with real-life case studies, which provide rich and qualitative examples, helping them both to connect with the concepts and policies presented and to appreciate how economics works in practice.The authors encourage students to stretch their understanding further by presenting them with a set of essay questions at the end of each chapter, motivating them to think more critically.The eighth edition is available for students and institutions to purchase in a variety of formats and is supported by online resources. The e-book offers a mobile experience and convenient access along with self-assessment activities, hyperlinked further reading functionality tools, navigation features, and links that offer extra learning support: www.oxfordtextbooks.co.uk/ebooks Online student resources supporting the book include: Video walkthroughs on trickier concepts for chapters 3, 4, 6, 8, 11, 12, 13, 16, and 18 Sample exam questions Multiple choice questions Review questions Web appendices Web links Online lecturer resources supporting the book include: Power Point slides Excel based exercises for macroeconomic modelling Lecture plans Solutions to end-of-chapter exercises Test bank

Boom And Bust Banking

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Author : David Beckworth
language : en
Publisher: Simon and Schuster
Release Date : 2012-10-01

Boom And Bust Banking written by David Beckworth and has been published by Simon and Schuster this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-10-01 with Business & Economics categories.

Exploring the forceful renewal of the boom-and-bust cycle after several decades of economic stability, this book is a research-based review of the factors that caused the 2008 recession. It offers cutting-edge diagnoses of the recession and prescriptions on how to boost the economy from leading economists. Congress created the Federal Reserve System in 1913 to tame the business cycle once and for all. Optimists believed central banking would moderate booms, soften busts, and place the economy on a steady trajectory of economic growth. A century later, in the wake of the worst recession in fifty years, Editor David Beckworth and his line-up of noted economists chronicle the critical role the Federal Reserve played in creating a vast speculative bubble in housing during the 2000s and plunging the world economy into a Great Recession. As commentators weigh the culpability of Wall Street’s banks against Washington’s regulators, the authors return our attention to the unique position of the Federal Reserve in recent economic history. Expansionary monetary policy formed the basis of the soaring housing prices, excessive leverage, and mispricing of risk that characterized the Great Boom and the conditions for recession. Yet as Boom and Bust Banking also explains, the Great Recession was not an inevitable result of the Great Boom. Contrary to the conventional wisdom, the Federal Reserve in fact tightened rather than loosened the money supply in the early days of the recession. Addressing a lack of critical studies of recent Federal Reserve policy, Boom and Bust Banking reveals the Federal Reserve’s hand in the economy’s deterioration from slowdown to global recession. At the close of the most destructive economic episode in a half-century, Boom and Bust Banking reconsiders the justifications for central banking and reflects on possibilities for reform. With the future ripe for new thinking, this volume is essential for policy makers and concerned citizens who wish to learn from recent history.

Economic Policy In Emu

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Author : Marco Buti
language : en
Publisher: Oxford University Press
Release Date : 1998

Economic Policy In Emu written by Marco Buti and has been published by Oxford University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 1998 with Business & Economics categories.

This volume reviews and assesses the recent economic and policy debate, focusing specifically on the functioning of monetary union.