Skip to main navigation Skip to main content
info(at)avldigital.remove-this.de
Deutsch English
Narrow Search
Search narrowed by
Last searches

Results for *

Displaying results 1 to 2 of 2.

  1. Make-up strategies with incomplete markets and bounded rationality
    Author: Dobrew, Michael; Gerke, Rafael; Giesen, Sebastian; Röttger, Joost
    Published: [2023]
    Publisher:  Deutsche Bundesbank, Frankfurt am Main

    We study the impact of market incompleteness and bounded rationality on the effectiveness of make-up strategies. To do so, we simulate a heterogeneous-agent New Keynesian (HANK) model with reflective expectations and an occasionally-binding effective... more

    Access:
    Verlag (kostenfrei)
    Resolving-System (kostenfrei)
    Resolving-System (kostenfrei)

    Location:
    Leibniz-Institut für Wirtschaftsforschung Halle, Bibliothek
    Inter-library loan:
    No inter-library loan

    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    DS 12
    Inter-library loan:
    No inter-library loan

     

    We study the impact of market incompleteness and bounded rationality on the effectiveness of make-up strategies. To do so, we simulate a heterogeneous-agent New Keynesian (HANK) model with reflective expectations and an occasionally-binding effective lower bound (ELB) on the policy rate. Our simulations show that make-up strategies can mitigate the negative consequences of the ELB for inflation and real economic activity. This result holds both for our HANK model as well as a corresponding representative-agent (RANK) model with complete markets, suggesting that market (in)completeness is not important for the effectiveness of make-up strategies. However, the stabilisation benefits of make-up strategies are small when agents’ cognitive ability is consistent with micro-evidence. This result is independent of market (in)completeness, emphasising the importance of rational expectations for make-up strategies. Furthermore, while market incompleteness and bounded rationality complement each other in attenuating the effects of forward guidance in our model, we do not observe such a complementarity with respect to the benefits of make-up strategies.

     
    Export to reference management software   RIS file
      BibTeX file
    Source: Union catalogues
    Language: English
    Media type: Ebook
    Format: Online
    ISBN: 9783957299321
    Other identifier:
    hdl: 10419/268488
    Series: Discussion paper / Deutsche Bundesbank ; no 2023, 01
    Subjects: Make-Up Strategies; Incomplete Markets; Bounded Rationality; HANK; Effective Lower Bound; Average Inflation Targeting
    Scope: 1 Online-Ressource (circa 68 Seiten), Illustrationen
  2. On household labour supply in sticky-wage HANK models
    Author: Gerke, Rafael; Giesen, Sebastian; Lozej, Matija; Röttger, Joost
    Published: [2024]
    Publisher:  Deutsche Bundesbank, Frankfurt am Main

    Heterogeneous-agent New Keynesian models with sticky nominal wages usually assume that wage-setting unions demand the same amount of hours from all households. As a result, unions do not take account of the fact that (i) households are heterogeneous... more

    Access:
    Resolving-System (kostenfrei)
    Verlag (kostenfrei)
    Resolving-System (kostenfrei)

    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    DS 12
    Inter-library loan:
    No inter-library loan

     

    Heterogeneous-agent New Keynesian models with sticky nominal wages usually assume that wage-setting unions demand the same amount of hours from all households. As a result, unions do not take account of the fact that (i) households are heterogeneous in their willingness to work, and that (ii) some households might have to work more hours than they would like to. In this paper, we consider two departures from the standard modelling approach. First, we consider a model version in which unions can demand different hours from different households, directly taking household heterogeneity into account. In this case, we show that unions find it optimal to ration hours worked for all households, such that nobody works more than desired. Compared to the standard case in which all households work the same amount by assumption, the response of output, wages and inflation to monetary policy shocks becomes notably less pronounced. This attenuation reflects that hours worked respond differently across the income distribution. The second model version we consider maintains the assumption that all households work the same amount but prohibits unions from requiring any household to work more than it would like to. This modification substantially lowers the effective stickiness of nominal wages, resulting in markedly different wage and inflation dynamics.

     
    Export to reference management software   RIS file
      BibTeX file
    Source: Union catalogues
    Language: English
    Media type: Ebook
    Format: Online
    ISBN: 9783957299703
    Other identifier:
    hdl: 10419/282992
    Edition: November 24, 2023
    Series: Discussion paper / Deutsche Bundesbank ; no 2024, 01
    Subjects: Heterogeneous households; HANK; labour supply; nominal wage rigidity; monetary policy
    Scope: 1 Online-Ressource (circa 40 Seiten), Illustrationen