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Monetary Policy and Superstar Firms

September 5, 2018 Bilal 0

Monetary Policy and Superstar Firms https://ift.tt/2CenRbu The yearly Jackson Hole gathering of central bankers has focused this year on the topic of changing market structure, the rise of superstar firms, and the implications of the way they compete for central banks. Last year, David Autor et al. suggested a new interpretation of the fall in the labour share based on the rise of “superstar firms.” If globalisation or technological changes give an advantage to the most productive firms in each industry, product market concentration will rise as industries become increasingly dominated by superstar firms with high profits and a low share of […]

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Discouraging Deviant Behavior in Monetary Economics — by Lawrence Christiano, Yuta Takahashi

September 4, 2018 Bilal 0

Discouraging Deviant Behavior in Monetary Economics — by Lawrence Christiano, Yuta Takahashi https://ift.tt/2NGs5Kw Discouraging Deviant Behavior in Monetary Economics NBER Working Paper No. 24949 Issued in August 2018 NBER Program(s):Economic Fluctuations and Growth We consider a model in which monetary policy is governed by a Taylor rule. The model has a unique equilibrium near the steady state, but also has other equilibria. The introduction of a particular escape clause into monetary policy works like the Taylor principle to exclude the other equilibria. We reconcile our finding about the escape clause with the sharply different conclusion reached in Cochrane (2011). Atkeson […]

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Tate Lacey sees hints of NGDP targeting in Powell’s remarks – Econlib

September 3, 2018 Bilal 0

Tate Lacey sees hints of NGDP targeting in Powell’s remarks – Econlib https://ift.tt/2wveqzc Tate Lacey of the Cato Institute has an interesting post discussing Jerome Powell’s recent Jackson Hole speech on monetary policy: Powell constructed his remarks around a nautical metaphor of “shifting stars.” In macroeconomic equations a variable has a star superscript (*) on it to indicate it is a fundamental structural feature of the economy. In Powell’s words, these starred values in conventional economic models are the “normal, or “natural,” or “desired” values (e.g. u* for the natural rate of unemployment, r* for the neutral rate of interest, […]