scholarly journals WEALTH INEQUALITY AND OPTIMAL MONETARY POLICY

2010 ◽  
Vol 14 (5) ◽  
pp. 629-644 ◽  
Author(s):  
Ryoji Hiraguchi
Keyword(s):  
Interest Rate ◽  
Incentive Compatibility ◽  
Wealth Inequality ◽  
Nominal Interest Rate ◽  
Optimal Monetary Policy ◽  
Friedman Rule ◽  
Initial Wealth ◽  
The Government ◽  
The One ◽  
Compatibility Constraint

We study the money-in-the-utility-function model in which agents are heterogeneous in their initial wealth. We show that the Friedman rule is not optimal even if the government uses nonlinear income taxation for redistribution. A positive nominal interest rate raises social welfare because it relaxes the incentive compatibility constraint for highly endowed agents. Although the setup is close to that of da Costa and Werning [Journal of Political Economy (2008) 116, 82–112], who investigate skill heterogeneity, the role of the nominal interest rate in this paper here differs from the one in their model.

OPTIMAL MONETARY POLICY FOR THE EMU ACCESSION COUNTRIES. A NEW KEYNESIAN APPROACH

2014 ◽  
Vol 19 (7) ◽  
pp. 1427-1475 ◽  
Author(s):  
Anna Lipińska
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Optimal Policy ◽  
Nominal Exchange Rate ◽  
Nominal Interest Rate ◽  
Output Gap ◽  
Optimal Monetary Policy ◽  
Accession Countries ◽  
Dynamic Stochastic ◽  
Maastricht Criteria

This paper uses a dynamic stochastic general equilibrium model of a two-sector small open economy to analyze how the Maastricht criteria modify a fully credible optimal monetary policy in the Economic and Monetary Union accession countries. We show that if the country is not constrained by the criteria, optimal policy should stabilize fluctuations in PPI inflation, in the aggregate output gap, and in the domestic and international terms of trade. The optimal policy constrained permanently by the Maastricht criteria is characterized by reduced variability of the nominal exchange rate, CPI inflation, and the nominal interest rate and by lower optimal targets for CPI inflation and nominal interest rate. This policy results in higher variability and nonzero means for both PPI inflation and output gap, thus leading to additional, but small, welfare costs compared with the unconstrained policy.

scholarly journals On the Welfare Cost of Inflation and the Recent Behavior of Money Demand

2009 ◽  
Vol 99 (3) ◽  
pp. 1040-1052 ◽  
Author(s):  
Peter N Ireland
Keyword(s):  
Interest Rate ◽  
Money Demand ◽  
Demand Curve ◽  
Nominal Interest Rate ◽  
Welfare Cost Of Inflation ◽  
Friedman Rule ◽  
Long Run ◽  
Income Ratio ◽  
Interest Rate Rule ◽  
Relationship Of

Post-1980 US data trace out a stable long-run money demand relationship of Cagan's semi-log form between the M1-income ratio and the nominal interest rate, with an interest semielasticity below 2. Integrating under this money demand curve yields estimates of the welfare costs of modest departures from Friedman's zero nominal interest rate rule for the optimum quantity of money that are quite small. The results suggest that the Federal Reserve's current policy, which generates low but still positive rates of inflation, provides an adequate approximation in welfare terms to the alternative of moving all the way to the Friedman rule. (JEL E31, E41, E52)

HOW CAN THE GOVERNMENT SPENDING MULTIPLIER BE SMALL AT THE ZERO LOWER BOUND?

2018 ◽  
Vol 23 (8) ◽  
pp. 3457-3482 ◽  
Author(s):  
Valerio Ercolani ◽  
João Valle e Azevedo
Keyword(s):  
Interest Rate ◽  
Government Spending ◽  
New Keynesian ◽  
Nominal Interest Rate ◽  
Size Of Government ◽  
Large Size ◽  
Keynesian Model ◽  
Recent Estimate ◽  
The Government ◽  
Relationship Of

Some recent empirical evidence questions the typically large size of government spending multipliers when the nominal interest rate is stuck at zero, finding output multipliers of around 1 or even lower, with an upper bound of around 1.5 in some circumstances. In this paper, we use a recent estimate of the degree of substitutability between private and government consumption in an otherwise standard New Keynesian model to show that this channel significantly reduces the size of government spending multipliers obtained when the nominal interest rate is at zero. All else being equal, the relationship of substitutability makes a government spending shock crowd out private consumption while being less inflationary, thus, limiting the typically expansionary effect of the fall in the real interest rate. Subject to the nominal interest rate being constrained at zero, the model generates output multipliers ranging from 0.8 to 1.6.

THE GOVERNMENT SPENDING MULTIPLIER IN A MODEL WITH THE COST CHANNEL

2020 ◽  
pp. 1-30 ◽  
Author(s):  
Salem Abo-Zaid
Keyword(s):  
Interest Rate ◽  
Government Spending ◽  
Marginal Cost ◽  
Real Interest Rate ◽  
The Other ◽  
Nominal Interest Rate ◽  
Liquidity Trap ◽  
Cost Channel ◽  
The Government ◽  
The Cost

This paper studies the government spending multiplier in the presence of the cost channel of the nominal interest rate. I find that the spending multiplier of normal times declines markedly when this channel is introduced. The rise in government spending leads to a rise in the nominal interest rate and, with the cost channel, to a rise in the marginal cost and inflation. In turn, this leads to a bigger rise in the nominal interest rate and the expected real interest rate, hence a lower multiplier, than in a model that abstracts from the cost channel. On the other hand, in a liquidity trap, the cost channel makes the spending multiplier larger. Therefore, by ignoring the cost channel, the spending multiplier is overestimated in normal times and underestimated during liquidity trap episodes. Since liquidity traps are rare, however, the spending multiplier is mostly lower than in previous estimates.

TEMPTATION AND SELF-CONTROL IN A MONETARY ECONOMY

2016 ◽  
Vol 22 (4) ◽  
pp. 1076-1095 ◽  
Author(s):  
Ryoji Hiraguchi
Keyword(s):  
Interest Rate ◽  
Self Control ◽  
Nominal Interest Rate ◽  
Real Money ◽  
The Real ◽  
Friedman Rule ◽  
Monetary Economy

We construct a microfounded model of money with Gul–Pesendorfer preferences. In each period, agents are tempted to spend all their money by the end of the period, and they suffer from the forgone utility that could have been obtained by adopting the tempting choice. We find that the Friedman rule may not be optimal. A positive nominal interest rate improves welfare because it reduces the real money balances and renders the temptation less attractive. The welfare gained by deviating from the rule is equivalent to 0.67% of consumption.

Optimal Monetary Policy in an Overlapping Generations Model with Search Theoretic Monetary Exchange

2017 ◽  
Vol 17 (2) ◽  
Author(s):  
Ryoji Hiraguchi
Keyword(s):  
Overlapping Generations ◽  
Optimal Level ◽  
Optimal Monetary Policy ◽  
Overlapping Generations Model ◽  
Friedman Rule ◽  
Lump Sum ◽  
Decentralized Markets ◽  
The Government ◽  
Decentralized Market ◽  
Specific Tax

AbstractIt is well-known that in the monetary OLG models, a deviation from the Friedman rule can improve welfare because it generates intergenerational wealth transfers; however, the rule becomes optimal if the age-specific lump-sum tax policy is available. We revisit the issue using a microfounded model of money with centralized and decentralized markets. The individuals live for two periods. The young individuals work, receive wage income and hold money and capital in the centralized market. They also trade goods in the decentralized markets either as a buyer or a seller. Only money is accepted as a means of payment in the decentralized markets. The old individuals consume all their wealth in the centralized market. The quantity in the decentralized market negatively depends on the seller’s wealth, because the marginal utility of consumption in the centralized market is diminishing, but the buyer takes it as exogenous. Therefore, the equilibrium wealth exceeds the socially optimal level under the Friedman rule. A positive nominal interest rate makes money holdings costly, reduces wealth and improves welfare, even if the government optimally uses the age-specific tax.

A NOTE ON TREND GROWTH, UNEMPLOYMENT, AND OPTIMAL MONETARY POLICY

2018 ◽  
Vol 23 (4) ◽  
pp. 1703-1719
Author(s):  
Wolfgang Lechthaler ◽  
Mewael F. Tesfaselassie
Keyword(s):  
Monetary Policy ◽  
Labor Market ◽  
Interest Rate ◽  
Nominal Interest Rate ◽  
Price Stability ◽  
Optimal Monetary Policy ◽  
Search And Matching ◽  
Trend Growth

We analyze the implications of trend growth for optimal monetary policy in the presence of search and matching unemployment. We show that trend growth interacts importantly with the inefficiencies stemming from the labor market. Higher trend growth exacerbates the inefficiencies of the labor market and therefore calls for larger deviations from price stability. Our analysis implies that lower trend growth reduces not only the level but also the optimal volatility of the nominal interest rate.

Migration and US agricultural competitiveness

2013 ◽  
Vol 10 (2) ◽  
pp. 159-179 ◽  
Author(s):  
Philip L. Martin
Keyword(s):  
Farm Workers ◽  
Easy Access ◽  
Foreign Born ◽  
Guest Workers ◽  
Long Run ◽  
Short Run ◽  
Lower Wage ◽  
The Government ◽  
The One

Agriculture has one of the highest shares of foreign-born and unauthorized workers among US industries; over three-fourths of hired farm workers were born abroad, usually in Mexico, and over half of all farm workers are unauthorized. Farm employers are among the few to openly acknowledge their dependence on migrant and unauthorized workers, and they oppose efforts to reduce unauthorized migration unless the government legalizes currently illegal farm workers or provides easy access to legal guest workers. The effects of migrants on agricultural competitiveness are mixed. On the one hand, wages held down by migrants keep labour-intensive commodities competitive in the short run, but the fact that most labour-intensive commodities are shipped long distances means that long-run US competitiveness may be eroded as US farmers have fewer incentives to develop labour-saving and productivity-improving methods of farming and production in lower-wage countries expands.

Strategi Pengembangan Kelompok Wanita Tani pada Optimalisasi Lahan Pekarangan di Desa Wonogiri

2018 ◽  
Vol 1 (1) ◽  
pp. 34-43
Author(s):  
Nindy Danisa Wulandari
Keyword(s):  
Government Regulation ◽  
Descriptive Analysis ◽  
Development Strategies ◽  
Women Farmers ◽  
Quantitative Descriptive Analysis ◽  
Self Reliance ◽  
The Government ◽  
Quantitative Descriptive ◽  
The One ◽  
Purposive Sample

Development of food security implemented to meet the human basic needs that provide benefits fairly and equitably based on self – reliance, and not contrary to public faith. Referring to the government regulation No 22 of 2009 concerning Food Consumption Diversification Acceleration (P2KP). However, it is not supported by the development of women farmers. The method use in this research is quantitative descriptive analysis using SWOT (Strength, Weakness, Opportunity and Treath). The samples in this study is the purposive sample. Result of a study showed the amount of income earned from the group of women farmers in the one month is 150,000/ members. Proper development strategies used in the development strategies used in the development KWT Melati is a Growth Oriented Strategy is very profitable strategy to seize opportunities with the strength. Pembangunan ketahan pangan dilaksanakan untuk memenuhi kebutuhan dasar manusia yang memberikan manfaat secara adil dan merata berdasarkan kemandirian, dan tidak bertentangan dengan keyakinan masyarakat. Mengacu pada Peraturan Pemerintah No 22 Tahun 2009 mengenai Percepatan Penganekaragaman Konsumsi Pangan (P2KP). Namun, hal ini tidak didukung dengan adanya pengembangan kelompok wanita tani. Metode yang digunakan dalam penelitian ini adalah deskriptif kuantitatif dengan menggunakan analisis SWOT (Strength, Weakness, Opportunity and Treath). Penentuan sampel dalam penelitian ini adalah dengan sampel purposive. Hasil penelitian menunjukan besaran pendapatan yang diperoleh dari adanya kelompok wanita tani dalam satu bulan adalah Rp.150.000/bulan/anggota. Strategi pengembangan yang tepat digunakan dalam pengembangan Kelompok Wanita Tani (KWT) Melati adalah Growth Oriented Strategy.

Recommendations of The Ombudsman’s Dilemma: Between Law Enforcement Officials and Protection of Credibility

2018 ◽  
Vol 2 ◽  
pp. 1-12
Author(s):  
Dyah Adriantini Sintha Dewi
Keyword(s):  
Law Enforcement ◽  
Public Service ◽  
Public Services ◽  
Point Of View ◽  
Law Enforcement Officials ◽  
Muslim Majority ◽  
The Republic ◽  
The Government ◽  
The One ◽  
Oversight Body

The Ombudsman as an external oversight body for official performance, in Fikih Siyasah (constitutionality in Islam) is included in the supervision stipulated in legislation (al-musahabah al-qomariyah). Supervision is done so that public service delivery to the community is in accordance with the rights of the community. This is done because in carrying out its duties, officials are very likely to conduct mal administration, which is bad public services that cause harm to the community. The Ombudsman is an institution authorized to resolve the mal administration issue, in which one of its products is by issuing a recommendation. Although Law No. 37 of 2018 on the Ombudsman of the Republic of Indonesia states that the recommendation is mandatory, theombudsman's recommendations have not been implemented. This is due to differences in point of view, ie on the one hand in the context of law enforcement, but on the other hand the implementation of the recommendation is considered as a means of opening the disgrace of officials. Recommendations are the last alternative of Ombudsman's efforts to resolve the mal administration case, given that a win-win solution is the goal, then mediation becomes the main effort. This is in accordance with the condition of the Muslim majority of Indonesian nation and prioritizes deliberation in resolving dispute. Therefore, it is necessary to educate the community and officials related to the implementation of the Ombudsman's recommendations in order to provide good public services for the community, which is the obligation of the government.

Sign in / Sign up

Export Citation Format

Share Document