Monetary Policy and Government Debt Dynamics Without Commitment Staff Working Paper 2019-52 Dmitry Matveev I show that maturity considerations affect the optimal conduct of monetary and fiscal policy during a period of government debt reduction. I consider a New Keynesian model and study a dynamic game of monetary and fiscal policy authorities without commitment, characterizing the incentives that drive the choice of interest rate. Content Type(s): Staff research, Staff working papers Research Topic(s): Fiscal policy, Monetary policy JEL Code(s): E, E5, E52, E6, E62, E63
Technology Adoption in Input-Output Networks Staff Working Paper 2019-51 Xintong Han, Lei Xu We study how input-output networks affect the speed of technology adoption. In particular, we model the decision to adopt the programming language Python 3 by software packages. Python 3 provides advanced features but is not backward compatible with Python 2, which implies it comes with adoption costs. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Firm dynamics, Productivity JEL Code(s): C, C6, C61, L, L2, L23, L8, L86, O, O1, O14, O3, O33
Monetary Payoff and Utility Function in Adaptive Learning Models Staff Working Paper 2019-50 Erhao Xie When players repeatedly face an identical or similar game (e.g., coordination game, technology adoption game, or product choice game), they may learn through experience to perform better in the future. This learning behaviour has important economic implications. Content Type(s): Staff research, Staff working papers Research Topic(s): Econometric and statistical methods, Economic models JEL Code(s): C, C5, C57, C7, C72, C9, C92
On the Evolution of Multiple Jobholding in Canada Staff Working Paper 2019-49 Olena Kostyshyna, Etienne Lalé The number of workers who hold more than one job (a.k.a. multiple jobholders) has increased recently in Canada. While this seems to echo the view that non-standard work arrangements are becoming pervasive, the increase has in fact been trivial compared with the long-run rise of multiple jobholding that has occurred since the mid-1970s. Content Type(s): Staff research, Staff working papers Research Topic(s): Econometric and statistical methods, Labour markets JEL Code(s): E, E2, E24, J, J2, J21, J22, J6, J60
Model Uncertainty and Wealth Distribution Staff Working Paper 2019-48 Edouard Djeutem, Shaofeng Xu This paper studies the implications of model uncertainty for wealth distribution in a tractable general equilibrium model with a borrowing constraint and robustness à la Hansen and Sargent (2008). Households confront model uncertainty about the process driving the return of the risky asset, and they choose robust policies. Content Type(s): Staff research, Staff working papers Research Topic(s): Asset pricing, Business fluctuations and cycles, Economic models JEL Code(s): D, D3, D8, E, E2
Loan Insurance, Market Liquidity, and Lending Standards Staff Working Paper 2019-47 Toni Ahnert, Martin Kuncl We examine loan insurance—credit risk transfer upon origination—in a model in which lenders can screen, learn loan quality over time, and can sell loans. Some lenders with low screening ability insure, benefiting from higher market liquidity of insured loans while forgoing the option to exploit future information about loan quality. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Financial markets, Financial system regulation and policies JEL Code(s): G, G0, G01, G2, G21, G28
Extreme Downside Risk in Asset Returns Staff Working Paper 2019-46 Lerby Ergun Financial markets can experience sudden and extreme downward movements. Investors are highly concerned about the performance of their assets in such scenarios. Some assets perform badly in a downturn in the market; others have milder reactions. Content Type(s): Staff research, Staff working papers Research Topic(s): Asset pricing, Econometric and statistical methods JEL Code(s): C, C1, C14, G, G1, G11, G12
What Do Survey Data Tell Us About US Businesses? Staff Working Paper 2019-45 Anmol Bhandari, Serdar Birinci, Ellen McGrattan, Kurt See This paper examines the reliability of survey data on business incomes, valuations, and rates of return, which are key inputs for studies of wealth inequality and entrepreneurial choice. Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Firm dynamics JEL Code(s): C, C8, C83, E, E2, E22, H, H2, H25
Interconnected Banks and Systemically Important Exposures Staff Working Paper 2019-44 Alan Roncoroni, Stefano Battiston, Marco D’Errico, Grzegorz Halaj, Christoffer Kok How do banks' interconnections in the euro area contribute to the vulnerability of the banking system? We study both the direct interconnections (banks lend to each other) and the indirect interconnections (banks are exposed to similar sectors of the economy). These complex linkages make the banking system more vulnerable to contagion risks. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial stability JEL Code(s): C, C6, C63, G, G1, G15, G2, G21
A Macroprudential Theory of Foreign Reserve Accumulation Staff Working Paper 2019-43 Fernando Arce, Julien Bengui, Javier Bianchi This paper proposes a theory of foreign reserves as macroprudential policy. We study an open-economy model of financial crises in which pecuniary externalities lead to overborrowing, and show that by accumulating international reserves, the government can achieve the constrained-efficient allocation. Content Type(s): Staff research, Staff working papers Research Topic(s): Balance of payments and components, Financial stability, Financial system regulation and policies, Foreign reserves management, International financial markets JEL Code(s): D, D5, D52, D6, D62, F, F3, F34