Please use this identifier to cite or link to this item: https://hdl.handle.net/10216/71376
Author(s): Fabio Verona
Manuel Mota Freitas Martins
Inês Drumond
Title: (Un)anticipated Monetary policy in a DSGE model with a shadow banking system (Bank of Finland Research Discussion Paper 4/2013)
Issue Date: 2013
Abstract: Motivated by the U.S. events of the 2000s, we address whether a too low for too long interest rate policy may generate a boom-bust cycle. We simulate anticipated and unanticipated monetary policies in state-of-the-art DSGE models and in a model with bond financing via a shadow bankingsystem, in which the bond spread is calibrated for normal and optimistic times. Our results suggest that the U.S. boom-bust was caused by the combination of (i) interest rates that were too low for too long, (ii) excessive optimism and (iii) a failure of agents to anticipate the extent of the abnormally favourable conditions.
Subject: Economia, Economia e gestão
Economics, Economics and Business
Scientific areas: Ciências sociais::Economia e gestão
Social sciences::Economics and Business
URI: https://repositorio-aberto.up.pt/handle/10216/71376
Document Type: Relatório Técnico
Rights: openAccess
License: https://creativecommons.org/licenses/by-nc/4.0/
Appears in Collections:FEP - Relatório Técnico

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