Okano, E. and Eguchi, M. (2019) Optimal monetary and fiscal policy rules, welfare gains and exogenous shocks in an economy with default risk. Working Paper. Birkbeck, University of London, London, UK.
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Abstract
We develop a class of dynamic stochastic general equilibrium models with nominal rigidities and we introduce default risk in the model. We find that if productivity changes are observed, policy authorities should be aware of default risk, although being aware of such risk is not very important following government expenditure changes. Welfare gains from awareness of default risk are nonnegligible if productivity changes, although welfare gains from awareness of default risk are tiny following government expenditure changes.
Metadata
| Item Type: | Monograph (Working Paper) |
|---|---|
| Additional Information: | BCAM Working Paper Series 1902. ISSN 1745-8587 |
| Keyword(s) / Subject(s): | Sovereign Risk, Optimal Monetary Policy, Fiscal Theory of the Price Level |
| School: | Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School |
| Research Centres and Institutes: | Applied Macroeconomics, Birkbeck Centre for |
| Depositing User: | Administrator |
| Date Deposited: | 24 Jul 2019 12:08 |
| Last Modified: | 02 Aug 2023 17:52 |
| URI: | https://eprints.bbk.ac.uk/id/eprint/28257 |
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