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Macroeconomics
Research from Rutgers University broadens understanding of macroeconomics
January 9th, 2009
According to recent research from the United States, "Following a contractionary monetary policy shock, the aggregate output decreases over time for six to eight quarters, while the real interest rate increases immediately and remains high for three quarters, which can hardly be replicated by models characterized by a standard consumption Euler equation. This paper adopts a segmented markets framework where some households are permanently excluded from financial markets." "The aggregate output and the nominal interest rate are modeled as exogenous autoregressive processes, while the real interest rate is determined endogenously. For intermediate levels of market...
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Source: VerticalNews Economics (2009-01-09)
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