Heterogeneity in Macroeconomics and Its Implications for Monetary Policy

Fabian Schnell develops a model indicating that by keeping real interest rates too low, monetary policy can distort the allocation of resources across firms and potentially delay economic recovery after a recession. This is a new channel of monetary policy that is especially relevant in view of "Quantitative Easing" programs. A second model focuses on the short-term implications of heterogeneously productive firms, showing an acceleration effect of technology shocks. Finally, an empirical investigation of firms' price-setting behaviors shows that time-dependent factors, relative to state-dependent ones, play a small role with respect to the probability and the size of a price change. All results provide new insights for monetary policy.

• | Author: Fabian Schnell
• | Publisher: Springer Gabler
• | Publication Date: May 07, 2015
• | Number of Pages: 166 pages
• | Binding: Paperback or Softback
• | ISBN-10: 3658097302
• | ISBN-13: 9783658097301