Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/185815
Authors: 
Altermatt, Lukas
Year of Publication: 
2018
Series/Report no.: 
WWZ Working Paper 2018/13
Abstract: 
This paper analyzes optimal monetary and fiscal policy in a model where money and savings are essential and asset markets matter. The model is able to match some stylized facts about the correlation of real interest rates and stock price-dividend ratios. The results show that fiscal policy can improve welfare by increasing the amount of outstanding government debt. If the fiscal authority is not willing or able to increase debt, the monetary authority can improve welfare of current generations by reacting procyclically to asset return shocks; however, this policy affects welfare of future generations if it is not coordinated with fiscal policy measures. The model also shows that policies like QE reduce welfare of future generations.
Subjects: 
new monetarism
overlapping generations
zero lower bound
optimal stabilization
JEL: 
E43
E44
E52
G12
G18
Document Type: 
Working Paper
Social Media Mentions:

Files in This Item:
File
Size
444.23 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.