Marc Dordal Carreras (Hong Kong University of Science and Technology, Professor)
Title: Self-fulfilling Volatility and a New Monetary Policy
Abstract: We demonstrate that macroeconomic models with nominal rigidities admit multiple global solutions supporting alternative equilibria typically overlooked in the literature. In these equilibria, self-fulfilling aggregate volatility pushes the economy into crises (booms) characterized by increased (decreased) aggregate risk. This phenomenon arises because conventional monetary policy cannot fully anchor expectations about output growth, as these expectations depend not only on the policy rate but also on the strength of the precautionary savings channel. We propose a new policy rule that explicitly targets aggregate volatility alongside standard objectives, restoring equilibrium uniqueness and ensuring complete stabilization.
5월 30일 대우관 323호에서 경제학과 BK 초청 세미나가 진행되었습니다.
[발표 연사 및 주제]
Title: Self-fulfilling Volatility and a New Monetary Policy
Abstract: We demonstrate that macroeconomic models with nominal rigidities admit multiple global solutions supporting alternative equilibria typically overlooked in the literature. In these equilibria, self-fulfilling aggregate volatility pushes the economy into crises (booms) characterized by increased (decreased) aggregate risk. This phenomenon arises because conventional monetary policy cannot fully anchor expectations about output growth, as these expectations depend not only on the policy rate but also on the strength of the precautionary savings channel. We propose a new policy rule that explicitly targets aggregate volatility alongside standard objectives, restoring equilibrium uniqueness and ensuring complete stabilization.
[행사 포스터]