Logo
Munich Personal RePEc Archive

Can Discounting Alone Resolve the Forward Guidance Puzzle?

Ji, Yangyang (2022): Can Discounting Alone Resolve the Forward Guidance Puzzle?

[thumbnail of MPRA_paper_115353.pdf]
Preview
PDF
MPRA_paper_115353.pdf

Download (790kB) | Preview

Abstract

Numerically, we examine the expansionary effects of forward guidance at different horizons in Gabaix’s (2020) model and find that the role of discounting is limited and that unrealistic assumptions about parameter calibration are also required to resolve the forward guidance puzzle. We extend Gabaix’s (2020) model to include wage stickiness and find that discounting alone can resolve the puzzle even assuming standard calibration.

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.