Izvorni znanstveni članak
https://doi.org/10.1080/1331677X.2022.2107042
Welfare costs of external shocks in the mediumscale model with shifting moderate trend inflation
Le Thanh Ha
Sažetak
We aim at investigating welfare costs of shocks as well as dynamics
of business and financial cycle due to these shocks. By using
the theoretical model and parameters calibrated jointly to match
the selected moments for the U.S. data during 1954Q3–2018Q4
period, our findings emphasise interaction between trend inflation
and shocks. In the one side, welfare costs of these shocks in the
Rotemberg model are modest but these costs increase when central
banks raise their inflation targets to the higher level. Under
impacts of these shocks, the economy gets more volatile reflected
by higher dynamics of business and financial cycles. On the other
hand, we investigate impacts of trend inflation on impulse
response of key macroeconomic as well as financial variables to
these shocks. In almost cases, these variables reacts more strongly
to the shocks for higher trend inflation levels. Importantly, there
are long-lasting debt response and short-lived equity response to
unexpected changes in financial conditions.
Ključne riječi
Rotemberg price and wage setting; financial shock and frictions; shifting trend inflation; welfare consequences
Hrčak ID:
306640
URI
Datum izdavanja:
30.4.2023.
Posjeta: 137 *