Essays in macroeconomic theory and optimal policies

This thesis contributes to modern macroeconomic theory. It is composed of three chapters that investigate the role of household heterogeneity and the design of monetary and fiscal policies in shaping macroeconomic outcomes. Read More

This thesis contributes to modern macroeconomic theory. It is composed of three chapters that investigate the role of household heterogeneity and the design of monetary and fiscal policies in shaping macroeconomic outcomes.
The first chapter studies the link between labour market risks and equilibrium in the market for durable goods. It develops a quantitative model in which households optimally choose nondurable consumption, the accumulation of durable goods, and holdings of financial assets. The model is used to show that, when unemployment risk increases, precautionary savings motives and the implied portfolio rebalancing towards liquid assets lead to decreases in the resale price of durables, a feature that is consistent with empirical observations.
The second chapter investigates the properties of optimal taxes and transfers in a framework where household heterogeneity is explicitly accounted for. We describe how the introduction of heterogeneity alters the prescriptions of the model when compared to its representative agent counterpart. We also propose an empirical application of the theory to show that heterogeneity brings the model predictions closer to their counterpart in the data.
The third chapter proposes a framework of optimal monetary policy in the case where government debt sustainability may be a constraint for the central bank. In the case where optimal policy exhibits « debt concerns » monetary policy becomes subservient to fiscal policy, and needs to partially give up on the objective of stabilizing inflation and the output gap. We link our results to the ones obtained in the literature on monetary and fiscal policy interactions, in which policies are usually summarized by exogenous feedback-rules. Applications of our theory to concrete policy scenarios are also provided.


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Specifications


Publisher
Presses universitaires de Louvain
Author
Boris Chafwehé,
Set
Language
English
BISAC Subject Heading
BUS039000 BUSINESS & ECONOMICS / Economics / Macroeconomics
BIC subject category (UK)
KCB Macroeconomics
Onix Audience Codes
06 Professional and scholarly
CLIL (Version 2013-2019)
3328 Macroéconomie
Title First Published
01 April 2021
Subject Scheme Identifier Code
: Macro-économie

Paperback


Publication Date
01 April 2021
ISBN-13
9782390611202
Extent
Main content page count : 238
Code
101886
List Price
20.00 €
ONIX XML
Version 2.1, Version 3

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Contents


Introduction 1
1 Durable Goods and Household Heterogeneity 5
2 Taxes, Transfers and Household Heterogeneity 61
3 Monetary Policy with and without Debt 117
Conclusions 209