scholarly journals Asset Prices and Aggregate Demand in a "Covid-19" Shock: A Model of Endogenous Risk Intolerance and LSAPs

2020 ◽  
Author(s):  
Ricardo Caballero ◽  
Alp Simsek
Keyword(s):  
Asset Prices ◽  
Aggregate Demand ◽  
Endogenous Risk

scholarly journals A Risk-Centric Model of Demand Recessions and Speculation*

2020 ◽  
Vol 135 (3) ◽  
pp. 1493-1566
Author(s):  
Ricardo J Caballero ◽  
Alp Simsek
Keyword(s):  
Asset Prices ◽  
Aggregate Demand ◽  
Weighted Average ◽  
New Keynesian ◽  
Interest Rate Policy ◽  
Keynesian Model ◽  
Wide Range ◽  
Financial Speculation ◽  
Rate Policy ◽  
High Valuation

Abstract We provide a continuous-time “risk-centric” representation of the New Keynesian model, which we use to analyze the interactions between asset prices, financial speculation, and macroeconomic outcomes when output is determined by aggregate demand. In principle, interest rate policy is highly effective in dealing with shocks to asset valuations. However, in practice monetary policy faces a wide range of constraints. If these constraints are severe, a decline in risky asset valuations generates a demand recession. This reduces earnings and generates a negative feedback loop between asset prices and aggregate demand. In the recession phase, average beliefs matter because they not only affect asset valuations but also determine the strength of the amplification mechanism. In the ex ante boom phase, belief disagreements (or heterogeneous asset valuations) matter because they induce investors to speculate. This speculation exacerbates the crash by reducing high-valuation investors’ wealth when the economy transitions to recession, which depresses (wealth-weighted) average beliefs. Macroprudential policy that restricts speculation in the boom can Pareto improve welfare by increasing asset prices and aggregate demand in the recession.

Economic effects of monetary policy in Russia: What do large datasets tell us?

2020 ◽  
pp. 31-53 ◽  
Author(s):  
Anna A. Pestova ◽  
Natalia A. Rostova
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Economic Activity ◽  
Global Financial Crisis ◽  
Exchange Rate Regime ◽  
Aggregate Demand ◽  
Economic Effects ◽  
Theoretical Concepts ◽  
Empirical Estimates

Is the Bank of Russia able to control inflation and, at the same time, manage aggregate demand using its interest rate instruments? In other words, are empirical estimates of the effects of monetary policy in Russia consistent with the theoretical concepts and experience of advanced economies? This paper is aimed at addressing these issues. Unlike previous research, we employ “big data” — a large dataset of macroeconomic and financial data — to estimate the effects of monetary policy in Russia. We focus exclusively on the period after the 2008—2009 global financial crisis when the Bank of Russia announced the abandoning of its fixed ruble exchange rate regime and started to gradually transit to an interest rate management. Our estimation results do not confirm standard responses of key economic activity and price variables to tightening of monetary policy. Specifically, our estimates do not reveal a statistically significant restraining effect of the Bank of Russia’s policy of high interest rates on inflation in recent years. At the same time, we find a significant deteriorating effect of the monetary tightening on economic activity indicators: according to our conservative estimates, each of the key rate increases occurred in March and December 2014 had led to a decrease in the industrial production index by about 0.2 percentage points within a year.

A Behavioral Explanation to Spatial Dependencies in Commercial Real Estate Asset Prices

2019 ◽  
Author(s):  
Parmanand Sinha ◽  
Prashant Das ◽  
Julia Freybote ◽  
Roland Fuess
Keyword(s):  
Real Estate ◽  
Asset Prices ◽  
Commercial Real Estate ◽  
Spatial Dependencies

Aggregate Earnings and Asset Prices

CFA Digest ◽  
2010 ◽  
Vol 40 (1) ◽  
pp. 64-65
Author(s):  
Mohammed Saqib
Keyword(s):  
Asset Prices ◽  
Aggregate Earnings

Volatility, the Macroeconomy, and Asset Prices

CFA Digest ◽  
2015 ◽  
Vol 45 (4) ◽  
Author(s):  
Paul Lebo
Keyword(s):  
Asset Prices

Inclusive Growth with Zakat

2015 ◽  
Vol 54 (4I-II) ◽  
pp. 997-1010
Author(s):  
Muhammad Mazhar Iqbal
Keyword(s):  
Economic Growth ◽  
Aggregate Demand ◽  
Economic Consequences ◽  
Poor People ◽  
Kuznets Curve ◽  
Inclusive Growth ◽  
Marginal Productivity ◽  
The Social

Zakat is an annual religious levy that is collected from rich Muslims and its proceeds are disbursed among poor people of the society. It has many spiritual and social merits. For example, it purifies the hearts of zakat-givers as they give away a part of their wealth, one of the most precious things in their lives, seeking the pleasure of God without requiring any worldly gains whatsoever. It bridges the social gap between „haves‟ and „have-nots.‟ This study analyses, however, only economic consequences of Zakat for economic growth. They cannot be appreciated duly unless one understands the following concepts of modern economics; various theories of consumption, aggregate demand, stagnation thesis, consumption puzzle, marginal productivity of capital and Kuznets curve.

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