Showing results 1 - 3 of 3
| Ludwig Straub
2021, Paper: "We characterize optimal monetary policy in response to asymmetric shocks that shift demand from one sector to another, a condition arguably faced by many economies emerging from the Covid-19 crisis and its aftermath. We show that the asymmetry naturally manifests itself as an endogenous cost-push shock, breaking divine coincidence, and resulting in inflation optimally exceeding its target despite elevated unemployment. In fact,…
| Ludwig Straub
August 2021, Paper: "Downward pressure on the natural rate of interest (r∗) is often attributed to an increase in saving. This study uses microeconomic data from the SCF+ to explore the relative importance of demo-graphic shifts versus rising income inequality on the evolution of saving behavior in the United States from 1950 to 2019. The evidence suggests that rising income inequality is the more im-portant factor explaining the decline in r∗.…
| Ludwig Straub
May 31, 2021, Paper: "When an economy is close to the zero lower bound on nominal interest rates, governments face a trade-off: excessively conservative fiscal policy risks persistently low output but aggressive fiscal expansion raises sustainability concerns. This study builds a framework of dynamic fiscal policy, showing that there exists a Goldilocks zone in which deficits are permanent but not too high, the nominal interest rate on…