| 来源类型 | Discussion paper
|
| 规范类型 | 论文
|
| 来源ID | DP16169
|
| DP16169 On the Transmission of Small and Large Shocks |
| Paul De Grauwe; Yuemei Ji
|
| 发表日期 | 2021-05-18
|
| 出版年 | 2021
|
| 语种 | 英语
|
| 摘要 | We analyze how small and large demand and supply shocks are transmitted in the economy. We use a behavioural macroeconomic model that is characterized by the fact that individuals lack the cognitive ability to understand the underlying model and to know the distribution of the shocks that hit the economy. We find, first, that when shocks are small the trajectory taken after the shock by output gap and inflation is unpredictable. In this case the signal provided by the shock is overwhelmed by the noise produced by the initial disequilbria at the moment of the shock. Second, when the shock is large (more than 5 standard deviations like in the case of the covid-shock) the subsequent trajectories taken by output gap and inflation typically coalesce around a good and a bad trajectory. The way this result comes about is that different initial conditions force the monetary authorities into making different choices about the interest rate. Sometimes these choices are bad so that the economy is forced into a bad trajectory and sometimes they are good pushing the economy into a benign trajectory. We also find that when the shocks are large the initial conditions in particular expectations have strong power in predicting which trajectory will be chosen. |
| 主题 | Monetary Economics and Fluctuations
|
| URL | https://cepr.org/publications/dp16169
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| 来源智库 | Centre for Economic Policy Research (United Kingdom)
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| 资源类型 | 智库出版物
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| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/545142
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推荐引用方式
GB/T 7714 |
Paul De Grauwe,Yuemei Ji. DP16169 On the Transmission of Small and Large Shocks. 2021.
|
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