Sooner or Later: Timing of Monetary Policy with Heterogeneous Risk-Taking

2016 ◽  
Vol 106 (5) ◽  
pp. 490-495 ◽  
Author(s):  
Dong Beom Choi ◽  
Thomas M. Eisenbach ◽  
Tanju Yorulmazer
Keyword(s):  
Monetary Policy ◽  
Risk Taking ◽  
Heterogeneous Agents ◽  
Liquidity Risk ◽  
Unconventional Monetary Policy ◽  
Targeted Interventions ◽  
Ex Post ◽  
Ex Ante ◽  
Discount Window ◽  
Transmission Of Monetary Policy

We analyze the effects and interactions of monetary policy tools that differ in terms of their timing and their targeting. In a model with heterogeneous agents, more productive agents endogenously expose themselves to higher interim liquidity risk by borrowing and investing more. Two inefficiencies impair the transmission of monetary policy: an investment- and a hoarding inefficiency. Heterogeneous agents respond disparately to ex-ante, conventional and ex-post, unconventional monetary policy. However, we show that the two policies are equivalent due to the endogeneity of hoarding. In contrast, targeted interventions such as discount-window lending can alleviate both inefficiencies at the same time.

Unconventional monetary policy and bank risk taking

2020 ◽  
Vol 109 ◽  
pp. 102233
Author(s):  
Thomas Matthys ◽  
Elien Meuleman ◽  
Rudi Vander Vennet
Keyword(s):  
Monetary Policy ◽  
Risk Taking ◽  
Bank Risk ◽  
Unconventional Monetary Policy

scholarly journals Investment Hangover and the Great Recession

2018 ◽  
Vol 10 (2) ◽  
pp. 113-153 ◽  
Author(s):  
Matthew Rognlie ◽  
Andrei Shleifer ◽  
Alp Simsek
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Great Recession ◽  
The Great Recession ◽  
Left Behind ◽  
Ex Post ◽  
Ex Ante ◽  
The Interest Rate

We present a model of investment hangover motivated by the Great Recession. Overbuilding of durable capital such as housing requires a reallocation of productive resources to other sectors, which is facilitated by a reduction in the interest rate. When monetary policy is constrained, overbuilding induces a demand-driven recession with limited reallocation and low output. Investment in other capital initially declines due to low demand, but it later booms and induces an asymmetric recovery in which the overbuilt sector is left behind. Welfare can be improved by ex post policies that stimulate investment (including in overbuilt capital) and ex ante policies that restrict investment. (JEL E22, E23, E32, E43, E52, R21, R31)

scholarly journals Spillovers of US unconventional monetary policy: quantitative easing, spreads, and international financial markets

2021 ◽  
Vol 7 (1) ◽  
Author(s):  
Zekeriya Yildirim ◽  
Mehmet Ivrendi
Keyword(s):  
Monetary Policy ◽  
Financial Markets ◽  
Risk Taking ◽  
Large Scale ◽  
Emerging Market ◽  
Spillover Effects ◽  
International Financial Markets ◽  
Quantitative Easing ◽  
Unconventional Monetary Policy ◽  
The Us

AbstractThis study investigates the international spillover effects of US unconventional monetary policy (UMP)—frequently called large-scale asset purchases or quantitative easing (QE)—on advanced and emerging market economies, using structural vector autoregressive models with high-frequency daily data. Blinder (Federal Reserve Bank of St. Louis Rev 92(6): 465–479, 2010) argued that the QE measures primarily aim to reduce US interest rate spreads, such as term and risk premiums. Considering this argument and recent empirical evidence, we use two spreads as indicators of US UMP: the mortgage and term spreads. Based on data from 20 emerging and 20 advanced countries, our empirical findings reveal that US unconventional monetary policies significantly affect financial conditions in emerging and advanced countries by altering the risk-taking behavior of investors. This result suggests that the risk-taking channel plays an important role in transmitting the effects of these policies to the rest of the world. The extent of these effects depends on the type of QE measures. QE measures such as purchases of private sector securities that lower the US mortgage spread exert stronger and more significant spillover effects on international financial markets than those that reduce the US term spread. Furthermore, the estimated financial spillovers vary substantially across countries and between and within the emerging and advanced countries that we examine in this study.

scholarly journals Risk taking by agents: The role of ex-ante and ex-post accountability

2014 ◽  
Vol 123 (3) ◽  
pp. 387-390 ◽  
Author(s):  
Monique M.H. Pollmann ◽  
Jan Potters ◽  
Stefan T. Trautmann
Keyword(s):  
Risk Taking ◽  
Ex Post ◽  
Ex Ante

scholarly journals Unconventional Monetary Policy and Funding Liquidity Risk

2020 ◽  
Author(s):  
Adrien d'Avernas ◽  
Quentin Vandeweyer ◽  
Matthieu Darracq Paries
Keyword(s):  
Monetary Policy ◽  
Liquidity Risk ◽  
Unconventional Monetary Policy ◽  
Funding Liquidity

scholarly journals Just Luck: An Experimental Study of Risk-Taking and Fairness

2013 ◽  
Vol 103 (4) ◽  
pp. 1398-1413 ◽  
Author(s):  
Alexander W Cappelen ◽  
James Konow ◽  
Erik Ø Sørensen ◽  
Bertil Tungodden
Keyword(s):  
Experimental Study ◽  
Risk Taking ◽  
Ex Post ◽  
Ex Ante ◽  
Distribution Of Income

Choices involving risk significantly affect the distribution of income and wealth in society. This paper reports the results of the first experiment, to our knowledge, to study fairness views about risk-taking, specifically whether such views are based chiefly on ex ante opportunities or on ex post outcomes. We find that, even though many participants focus exclusively on ex ante opportunities, most favor some redistribution ex post. Many participants also make a distinction between ex post inequalities that reflect differences in luck and ex post inequalities that reflect differences in choices. These findings apply to both stakeholders and impartial spectators. (JEL D63, D81, H23)

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