Seminars

Ambiguous Policy Announcements

Economics & Decision Sciences

Speaker: Luigi Paciello
Professor , EIEF

12 October 2017 - HEC Campus - T Building - Room T004 - From 2:00 pm to 3:00 pm


We study the effects of an announcement of a future shift in monetary policy in a new Keynesian model, where ambiguity-averse households with heterogeneous net financial wealth face Knightian uncertainty about the credibility of the announcement. The response of aggregate demand to the announcement of a future loosening in monetary policy falls when financial wealth is more concentrated. The concentration of financial wealth matters because households with great net financial wealth (creditors) are those who are the most likely to believe the announcement, due to the potential loss of wealth from the prospective policy easing. And when creditors believe the announcement more than debtors, their expected wealth losses are larger than the wealth gains that debtors expect. So aggregate net wealth is perceived to fall, which attenuates the effects of forward guidance announcements and can even lead to a contraction in aggregate demand when financial wealth is concentrated enough. We calibrate the model to the Euro area after allowing agents to trade in short and long term nominal assets as well in real assets, and find that the effect can be quantitatively important.

Title : TBA

Economics & Decision Sciences

Speaker: Claire Lelarge
Paris Sud

10 September 2019 - HEC Campus


Title : TBA

Economics & Decision Sciences

Speaker: Larry Samuelson
Yale

13 June 2019 - HEC Campus


Title : TBA

Economics & Decision Sciences

Speaker: Gaetano Gaballo
Banque de France & PSE

19 March 2019 - HEC Campus


Title : TBA

Economics & Decision Sciences

Speaker: Diego Puga
CEMFI

12 March 2019 - HEC Campus


Title : TBA

Economics & Decision Sciences

Speaker: Daniel Chen
Toulouse School of Economics

21 February 2019 - HEC Campus



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