Research
Research
Inflation-stabilising Monetary and Fiscal Policy Rules at and away from the Lower Bound
Joint with Sebastian Hauptmeier and Christophe Kamps.
Revise and Resubmit, Journal of Monetary Economics
Previous Version: Counter-Cyclical Fiscal Rules and the Zero Lower Bound [ECB Working Paper No. 2715]
Abstract:
We analyse the importance of assigning an inflation-stabilisation goal to fiscal policy in face of an occasionally binding lower bound on the nominal interest rate. We show that, within the traditional assignment of active monetary policy and passive fiscal policy, the optimal fiscal policy rule features a strong response to the deviation of inflation from the central bank’s target. By complementing monetary policy, the optimal fiscal policy rule allows eliminating the deflationary bias associated with the lower bound. We also show that implementing an optimal fiscal feedback to inflation improves welfare – regardless of the extent of the lower bound risk.
The Preferential Treatment of Green Bonds
Joint with Francesco Giovanardi, Matthias Kaldorf, and Florian Wicknig.
Review of Economic Dynamics, 2023, Vol.51, pp. 657-676.
Joint with Matthias Kaldorf, Michael Krause, and Florian Wicknig.
Wirtschaftsdienst, 2022, 102. Jahrgang, Heft 7, S. 545–551.
The Effects of Energy Efficiency on GDP and GHG Emissions in Germany
Joint with Marcus Jüppner and Anika Martin
Bundesbank Technical Paper 03/2024.
Experience-Based Heterogeneity in Expectations and Monetary Policy
Joint with Florian Wicknig.
Best Paper Award 2nd Conference on Behavioral Research in Finance, Governance, and Accounting, 2020.
Abstract:
We incorporate expectations heterogeneity across age groups into a New Keynesian model with overlapping generations by assuming that agents only use lifetime observations to forecast inflation and the output gap. Relative to a model version with homogenous expectations, the transmission of monetary policy on inflation is impaired and its stabilisation trade-off under supply shocks aggravates. Since aggregate expectations are a function of the age-distribution, a demographic variation affects the monetary policy transmission on inflation through a composition effect on aggregate expectations. An increase in the share of old individuals enhances the monetary policy transmission on inflation and attenuates its stabilisation trade-off via the composition effect.