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Journal Article
Inflation Control: Do Central Bankers Have It Right?
Neo-Fisherites argue that conventional central banking wisdom has inflation control wrong, in that the way to increase (reduce) inflation is to increase (reduce) the central bank?s nominal interest rate target.
Working Paper
Credit markets, limited commitment, and government debt
A dynamic model with credit under limited commitment is constructed, in which limited memory can weaken the effects of punishment for default. This creates an endogenous role for government debt in credit markets, and the economy can be non-Ricardian. Default can occur in equilibrium, and government debt essentially plays a role as collateral and thus improves borrowers? incentives. The provision of government debt acts to discourage default, whether default occurs in equilibrium or not.
Journal Article
Monetary policy in the United States: a brave new world?
This article is a reflection on monetary policy in the United States during Ben Bernanke?s two terms as Chairman of the Federal Open Market Committee, from 2006 to 2014. Inflation targeting, policy during the financial crisis, and post-crisis monetary policy (forward guidance and quantitative easing) are discussed and evaluated.
Working Paper
Keynesian inefficiency and optimal policy: a new monetarist approach
A simple model of monetary/labor search is constructed to study Keynesian indeterminacy and optimal policy. In the model, economic agents have trouble splitting the surplus from exchange appropriately, and we consider monetary and fiscal policies that correct this Keynesian inefficiency. A Taylor rule does not imply determinacy, nor does it support an efficient outcome, in general. Optimal policies yield an efficient and determinate allocation of resources, but equilibrium policy actions, wages, and prices are indeterminate at the optimum.
Working Paper
Money and dynamic credit arrangements with private information
The authors construct a model with private information in which consumers write dynamic contracts with financial intermediaries.
Conference Paper
Do informational frictions justify federal credit programs?
Working Paper
Interest on Reserves, Interbank Lending, and Monetary Policy
A two-sector general equilibrium banking model is constructed to study the functioning of a floor system of central bank intervention. Only retail banks can hold reserves, and these banks are also subject to a capital requirement, which creates ?balance sheet costs? of holding reserves. An increase in the interest rate on reserves has very different qualitative effects from a reduction in the central bank?s balance sheet. Increases in the central bank?s balance sheet can have redistributive effects, and can reduce welfare. A reverse repo facility at the central bank puts a floor un- der the ...
Conference Paper
Private money
Report
Barter and monetary exchange under private information
We analyze economies with private information concerning the quality of commodities. Without private information there is a nonmonetary equilibrium with only high quality commodities produced, and money cannot improve welfare. With private information there can be equilibria with bad quality commodities produced, and sometimes only nonmonetary equilibrium is degenerate. The use of money can lead to active (i.e., nondegenerate) equilibria when no active nonmonetary equilibrium exists. Even when active nonmonetary equilibria exist, with private information money can increase welfare via its ...
Journal Article
Private money and counterfeiting