(Un)anticipated Monetary policy in a DSGE model with a shadow banking system (Bank of Finland Research Discussion Paper 4/2013)
Motivated by the U.S. events of the 2000s, we address whether a too low for too long interest rate policy may generate a boom-bust cycle. We simulate anticipated and unanticipated monetary policies in state-of-the-art DSGE models and in a model with bond financing via a shadow banking system, in whi...
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| Outros Autores: | , |
| Formato: | report |
| Idioma: | eng |
| Publicado em: |
2013
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| Assuntos: | |
| Texto completo: | https://hdl.handle.net/10216/71376 |
| País: | Portugal |
| Oai: | oai:repositorio-aberto.up.pt:10216/71376 |
| Resumo: | Motivated by the U.S. events of the 2000s, we address whether a too low for too long interest rate policy may generate a boom-bust cycle. We simulate anticipated and unanticipated monetary policies in state-of-the-art DSGE models and in a model with bond financing via a shadow banking system, in which the bond spread is calibrated for normal and optimistic times. Our results suggest that the U.S. boom-bust was caused by the combination of (i) interest rates that were too low for too long, (ii) excessive optimism and (iii) a failure of agents to anticipate the extent of the abnormally favourable conditions. |
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