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Savings, asset scarcity, and monetary policy

Altermatt, Lukas. (2018) Savings, asset scarcity, and monetary policy. WWZ Working Papers, 2018 (13). Basel.

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Official URL: https://edoc.unibas.ch/64166/

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Abstract

This paper analyzes optimal monetary and fiscal policy in a model where money and savings are essential and asset markets matter. The model is able to match some stylized facts about the correlation of real interest rates and stock price-dividend ratios. The results show that fiscal policy can improve welfare by increasing the amount of outstanding government debt. If the fiscal authority is not willing or able to increase debt, the monetary authority can improve welfare of current generations by reacting procyclically to asset return shocks; however, this policy affects welfare of future generations if it is not coordinated with fiscal policy measures. The model also shows that policies like QE reduce welfare of future generations.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Finanzmarkttheorie (Zimmermann)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Altermatt, Lukas
Item Type:Working Paper
Publisher:WWZ
Number of Pages:38
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
Language:English
Identification Number:
  • handle: RePEc:bsl:wpaper:2018/13
Last Modified:14 Aug 2019 09:55
Deposited On:25 May 2018 14:23

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