RAVN, Morten O., SCHMITT-GROHE, Stephanie, URIBE, Martin
Using panel structural VAR analysis and quarterly data from four industrialized countries, we document that an increase in government purchases leads to an expansion in output and private...
Pricing to Habits and the Law of One Price (2006)
RAVN, Morten O., SCHMITT-GROHE, Stephanie, URIBE, Martin
This paper proposes a novel international transmission mechanism based on the assumption of deep habits. The term deep habits stands for a preference specification according to which consumers form...
Pricing to Habits and the Law of One Price (2006)
RAVN, Morten O., SCHMITT-GROHE, Stephanie, URIBE, Martin
This paper proposes a novel international transmission mechanism based on the assumption of deep habits. The term deep habits stands for a preference specification according to which consumers form...
Pricing to Habits and the Law of One Price (2006)
RAVN, Morten O., SCHMITT-GROHE, Stephanie, URIBE, Martin
This paper proposes a novel international transmission mechanism based on the assumption of deep habits. The term deep habits stands for a preference specification according to which consumers form...
Backward-Looking Interest-Rate Rules, Interest-Rate Smoothing, and Macroeconomic Instability (2004)
Schmitt-Grohe, Stephanie., Uribe, Martin.
Journal of Money, Credit, and Banking - Volume 35, Number 6 (Part 2), December 2003
Backward-Looking Interest-Rate Rules, Interest Rate Smoothing, (2003)
Jess Benhabib, Stephanie Schmitt-grohe, Martn Uribe
The existing literature on the stabilizing properties of interest-rate feedback rules has stressed the perils of linking interest rates to forecasts of future inflation. Such rules have been found to...
Computing Sunspot Equilibria in Linear (2002)
Thomas A. Lubik, Frank Schorfheide, Ellen Mcgrattan, Stephanie Schmitt-grohe, Martin Uribe
We provide computationally simple methods of analyzing the e#ects of fundamental and sunspot shocks in linear rational expectations models when the equilibrium is indeterminate. Under indeterminacy...
Chaotic Interest Rate Rules (2001)
Jess Benhabib, Stephanie Schmitt-grohe, Martn Uribe
A growing emp irical and theoretical literature argues in favor of sp ecifying monetary p olicy in the form of Taylor-typ e interest rate feedback rules. That is, rules whereby the nominal interest...
The Perils of Taylor Rules (2001)
Jess Benhabib, Stephanie Schmitt-grohe, Martn Uribe
Since John Taylor's (1993) seminal paper, a large literature has argued that active interest rate feedback rules, that is, rules that respond to increases in inflation with a more than one-for-one...
Avoiding Liquidity Traps (2001)
Jess Benhabib, Stephanie Schmitt-grohe, Martn Uribe
Once the zerob ound on nominal interest rates is taken into account, Taylor-type interest-rate feedb ack rules give rise to unintended self-fulfilling decelerating inflation paths and aggregate...
Essays in quantitative equilibrium business cycle theory /--by Stephanie Schmitt-Grohe. (1994)
Thesis (Ph. D.)--University of Chicago, Dept. of Economics.
Typescript.
Optimal Simple and Implementable Monetary and Fiscal Rules
Stephanie Schmitt-Grohe, Martin Uribe
The goal of this paper is to compute optimal monetary and fiscal policy rules in a real business cycle model augmented with sticky prices, a demand for money, taxation, and stochastic government...
The Macroeconomics of Subsistence Points
Morten O. Ravn, Stephanie Schmitt-Grohe, Martin Uribe
This paper explores the macroeconomic consequences of preferences displaying a subsistence point. It departs from the existing related literature by assuming that subsistence points are specific to...
Optimal Fiscal and Monetary Policy In A Medium Scale Macro Model
Martin Uribe, Stephanie Schmitt-Grohe
In this paper we study optimal fiscal and monetary rules in a medium-scale estimated model of the U.S. business cycle. The model features several real and nominal rigidities that have been identfied...
Chaotic Interest Rate Rules: Expanded Version
Jess Benhabib, Stephanie Schmitt-Grohe, Martin Uribe
A growing empirical and theoretical literature argues in favor of specifying monetary policy in the form of Taylor-type interest rate feedback rules. That is, rules whereby the nominal interest rate...
Morten Ravn, Stephanie Schmitt-Grohe, Martin Uribe
This paper generalizes the standard habit formation model to an environment in which agents form habits over individual varieties of goods as opposed to over a composite consumption good. We refer to...
Backward-looking interest-rate rules, interest-rate smoothing, and macroeconomic instability
Jess Benhabib, Stephanie Schmitt-Grohe, Martin Uribe
The existing literature on the stabilizing properties of interest-rate feedback rules has stressed the perils of linking interest rates to forecasts of future inflation. Such rules have been found to...
Jess Benhabib, Stephanie Schmitt-Grohe, Martin Uribe
Once the zero bound on nominal interest rates is taken into account, Taylor-type interest rate feedback rules give rise to unintended self-fulfilling decelerating inflation paths and aggregate...
Jess Benhabib, Stephanie Schmitt-Grohe, Martin Uribe
Once the zero bound on nominal interest rates is taken into account, Taylor-type interest-rate feedback rules give rise to unintended self-fulfilling decelerating inflation paths and aggregate...
Optimal Fiscal and Monetary Policy in a Medium-Scale Macroeconomic Model: Expanded Version
Stephanie Schmitt-Grohe, Martin Uribe
In this paper, we study Ramsey-optimal fiscal and monetary policy in a medium-scale model of the U.S.\ business cycle. The model features a rich array of real and nominal rigidities that have been...
Optimal fiscal and monetary policy under sticky prices
Martin Uribe, Stephanie Schmitt-Grohe
This paper studies optimal fiscal and monetary policy under sticky product prices. The theoretical framework is a stochastic production economy without capital. The government finances an exogenous...
Pricing to Habits and the Law of One Price
Morten O. Ravn, Stephanie Schmitt-Grohe, Martin Uribe
This paper proposes a novel international transmission mechanism based on the assumption of deep habits. The term deep habits stands for a preference specification according to which consumers form...
Incomplete Cost Pass-Through Under Deep Habits
Morten Ravn, Stephanie Schmitt-Grohe, Martin Uribe
A number of empirical studies document that marginal cost shocks are not fully passed through to prices at the firm level and that prices are substantially less volatile than costs. We show that in...
Explaining the Effects of Government Spending Shocks on Consumption and the Real Exchange Rate
Morten O. Ravn, Stephanie Schmitt-Grohe, Martin Uribe
Using panel structural VAR analysis and quarterly data from four industrialized countries, we document that an increase in government purchases leads to an expansion in output and private...
Monetary Policy and Multiple Equilibria
Jess Benhabib, Stephanie Schmitt-Grohe, Martin Uribe
This paper characterizes conditions under which interest-rate feedback rules that set the nominal interest rate as an increasing function of the inflation rate induce aggregate instability by...
Endogenous Business Cycles and the Dynamics of Output, Hours, and Consumption
This paper studies the business-cycle fluctuations predicted by a two-sector endogenous-business-cycle model with sector-specific external increasing returns to scale. It focuses on aspects of actual...
Benhabib, Jess, Schmitt-Grohe, Stephanie, Uribe, Martin
When the Central Bank sets nominal rates as a a non-decreasing function of the inflation rate to stabilize the economy, that is it uses a Taylor Rule, the zero lower bound on interest rates may...
Balanced-budget rules, distortionary taxes, and aggregate instability
Stephanie Schmitt-Grohe, Martin Uribe
Budget ; Taxation
Business cycles ; Canada
Price level determinacy and monetary policy under a balanced-budget requirement
Stephanie Schmitt-Grohe, Martin Uribe
This paper analyzes the implications of a balanced budget fiscal policy rule for the determinacy of the price level in a cash-in-advance economy under three alternative monetary policy regimes. It...
Monetary policy and multiple equilibria
Jess Benhabib, Stephanie Schmitt-Grohe, Martin Uribe
In this paper, we characterize conditions under which interest rate feedback rules whereby the nominal interest rate is set as an increasing function of the inflation rate generate multiple...
Endogenous business cycles and the dynamics of output, hours, and consumption
This paper studies the business-cycle fluctuations predicted by a two-sector endogenous-business-cycle model with sector-specific external increasing returns to scale. It focuses on aspects of actual...
Matlab code for Closing Small Open Economy Models
Stephanie Schmitt-Grohe, Martin Uribe
Matlab codes for 'Closing Small Open Economy Models.' Notes: (1) Symbolic Math Toolbox is required (2) The files listed under "General Tools" below are required. Contents: Endogenous Discount Factor...
Stabilization Policy and the Costs of Dollarization.
Schmitt-Grohe, Stephanie, Uribe, Martin
This paper compares the welfare costs of business cycles in a dollarized economy to those arising in economies in which monetary policy takes the form of inflation targeting, money growth rate pegs,...
Solving dynamic general equilibrium models using a second-order approximation to the policy function
Stephanie Schmitt-Grohe, Martin Uribe
This paper studies the role of asset-market completeness for the properties of optimal fiscal and monetary policy. A suitable framework for this purpose is the small open economy with complete...
Stephanie Schmitt-Grohe, Martin Uribe
This paper studies, within a general equilibrium model, the dynamics of Y2K-type shocks: anticipated, permanent losses in output whose magnitude can be lessened by investing resources in advance. The...
Incomplete Cost Pass-Through Under Deep Habits
Morten Ravn, Stephanie Schmitt-Grohe, Martin Uribe
A number of empirical studies document that marginal cost shocks are not fully passed through to prices at the firm level and that prices are substantially less volatile than costs. We show that in...
MORTEN RAVN, STEPHANIE SCHMITT-GROHE, MARTIN URIBE
This paper generalizes the standard habit-formation model to an environment in which agents form habits over individual varieties of goods as opposed to over a composite consumption good. We refer to...
Stabilization policy and the costs of dollarization
Stephanie Schmitt-Grohe, Martin Uribe
Dollar, American ; Monetary policy
Backward-looking interest-rate rules, interest-rate smoothing, and macroeconomic instability
Jess Benhabib, Stephanie Schmitt-Grohe, Martin Uribe
The existing literature on the stabilizing properties of interest-rate feedback rules has stressed the perils of linking interest rates to forecasts of future inflation. Such rules have been found to...
Morten O. Ravn, Stephanie Schmitt-Grohe
This paper generalizes the standard habit formation model to an environment in which agents form habits over individual varieties of goods as opposed to over a composite consumption good. We refer to...
Stephanie Schmitt-Grohe, Martin Uribe
As the millenium draws to an end, the threat posed by the Year 2000 (Y2K) problem is inducing vast private and public spending on its remediation. In this paper, we embed the Y2K problem into a...
Stephanie Schmitt-Grohe, Martin Uribe
Matlab codes for 'Solving Dynamic General Equilibrium Models Using a Second-Order Approximation to the Policy Function.' Contents: First-order approximation: gx_hx.m, solab.m (by Paul Klein),...
Benhabib, Jess, Schmitt-Grohe, Stephanie, Uribe, Martin
interest rate feedback rules; zero bound on nominal rates; liquidity traps; multiple equilibria
Incomplete cost pass-through under deep habits
Martin Uribe, Morten Ravn, Stephanie Schmitt-Grohe
Markets ; Prices
What's News in Business Cycles
Stephanie Schmitt-Grohe, Martin Uribe
In this paper, we perform a structural Bayesian estimation of the contribution of anticipated shocks to business cycles in the postwar United States. Our theoretical framework is a...
Optimal Fiscal and Monetary Policy Under Sticky Prices
Stephanie Schmitt-Grohe, Martin Uribe
This paper studies optimal .scal and monetary policy under sticky product prices. The theoretical framework is a stochastic production economy without capital. The government finances an exogenous...
Closing Small Open Economy Models
Stephanie Schmitt-Grohe, Martin Uribe
The small open economy model with incomplete asset markets features a steady state that depends on initial conditions and equilibrium dynamics that possess a random walk component. A number of...
Backward-Looking Interest-Rate Rules, Interest-Rate Smoothing, and Macroeconomic Instability
Jess Behabib, Stephanie Schmitt-Grohe, Martin Uribe
The existing literature on the stabilizing properties of interest-rate feedback rules has stressed the perils of linking interest rates to forecasts of future inflation. Such rules have been found to...
Stephanie Schmitt-Grohe, Martin Uribe
This paper studies the role of asset-market completeness for the properties of optimal policy. A suitable framework for this purpose is the small open economy with complete international asset...
Optimal Fiscal and Monetary Policy Under Imperfect Competition
Stephanie Schmitt-Grohe, Martin Uribe
This paper studies optimal fiscal and monetary policy under imperfect competition in a stochastic, flexible-price, production economy without capital. It shows analytically that in this economy the...
Stephanie Schmitt-Grohe, Martin Uribe
This paper identifies optimal interest-rate rules within a rich, dynamic, general equilibrium model that has been shown to account well for observed aggregate dynamics in the postwar United States....
Optimal Inflation Stabilization in a Medium-Scale Macroeconomic Model
Stephanie Schmitt-Grohe, Martin Uribe
This paper characterizes Ramsey-optimal monetary policy in a medium-scale macroeconomic model that has been estimated to fit well postwar U.S.\ business cycles. We find that mild deflation is Ramsey...
Pricing to Habits and the Law of One Price
Morten Ravn, Stephanie Schmitt-Grohe, Martin Uribe
This paper proposes a novel international transmission mechanism based on the assumption of deep habits. The term deep habits stands for a preference specification according to which consumers form...
Comparing Two Variants of Calvo-Type Wage Stickiness
Stephanie Schmitt-Grohe, Martin Uribe
We compare two ways of modeling Calvo-type wage stickiness. One in which each household is the monopolistic supplier of a differentiated type of labor input (as in Erceg, et al., 2000) and one in...
Solving Dynamic General Equilibrium Models Using a Second-Order Approximation to the Policy Function
Stephanie Schmitt-Grohe, Martin Uribe
This paper derives a second-order approximation to the solution of a general class of discrete- time rational expectations models. The main theoretical contribution of the paper is to show that for...
Balanced-Budget Rules, Distortionary Taxes, and Aggregate Instability.
Schmitt-Grohe, Stephanie, Uribe, Martin
A traditional argument against a balanced-budget fiscal policy rule is that it amplifies business cycles by stimulating aggregate demand during booms via tax cuts and higher public expenditures and...
Backward-Looking Interest-Rate Rules, Interest-Rate Smoothing, and Macroeconomic Instability
Jess Benhabib, Stephanie Schmitt-Grohe, Martin Uribe
The existing literature on the stabilizing properties of interest-rate feedback rules has stressed the perils of linking interest rates to forecasts of future inflation. Such rules have been found to...
Stephanie Schmitt-Grohe, Martin Uribe
This paper studies the role of asset-market completeness for the properties of optimal policy. A suitable framework for this purpose is the small open economy with complete international asset...
Closing Small Open Economy Models
Stephanie Schmitt-Grohe, Martin Uribe
The small open economy model with incomplete asset markets features a steady state that depends on initial conditions. In addition, equilibrium dynamics posses a random walk component. A number of...
Jess Benhabib, Stephanie Schmitt-Grohe, Martin Uribe
A growing empirical and theoretical literature argues in favor of specifying monetary policy in the form of Taylor-type interest rate feedback rules. That is, rules whereby the nominal interest rate...
Solving Dynamic General Equilibrium Models Using a Second-Order Approximation to the Policy Function
Stephanie Schmitt-Grohe, Martin Uribe
This paper derives a second-order approximation to the solution of rational expectations, dynamic, general equilibrium models. To illustrate its applicability, the method is used to solve the...
Optimal Fiscal and Monetary Policy Under Sticky Prices
Stephanie Schmitt-Grohe, Martin Uribe
This paper studies optimal fiscal and monetary policy under sticky product prices. The theoretical framework is a stochastic production economy without capital. The government finances an exogenous...
Optimal Fiscal and Monetary Policy under Imperfect Competition
Stephanie Schmitt-Grohe, Martin Uribe
This paper studies optimal fiscal and monetary policy.
Liquidity Traps with Global Taylor Rules
Stephanie Schmitt-Grohe, Martin Uribe
A key result of a recent literature that focuses on the global consequences of Taylor-type interest rate feedback rules is that such rules in combination with the zero bound on nominal interest rates...
Stabilization Policy and the Costs of Dollarization
Stephanie Schmitt-Grohe, Martin Uribe
This paper compares the welfare costs of business cycles in a dollarized economy to those arising in economies with different monetary arrangements. The alternative monetary policy regimes studied...
Endogenous business cycles and the dynamics of output, hours, and consumption
This paper studies the business-cycle fluctuations predicted by a two-sector endogenous-business-cycle model with sector-specific external increasing returns to scale. It focuses on aspects of actual...
Monetary Policy and Multiple Equilibria
Jess Benhabib, Stephanie Schmitt-Grohe, Martin Uribe
In this paper, we characterize conditions under which interest rate feedback rules that set the nominal interest rate as an increasing function of the inflation rate induce aggregate instability by...
Price Level Determinacy and Monetary Policy under a Balanced-Budget Requirement
Stephanie Schmitt-Grohe, Martin Uribe
This paper analyzes the implications of a balanced-budget fiscal policy rule for price-level determination in a cash-in-advance economy under three alternative monetary policy regimes. It shows that...
Stephanie Schmitt-Grohe, Martin Uribe
As the millennium draws to an end, the threat posed by the Year 2000 (Y2K) problem is inducing vast private and public spending on its remediation. In this paper, we model the Y2K problem as an...
Jess Benhabib, Stephanie Schmitt-Grohe, Martin Uribe
Since John Taylor's (1993) seminal paper, a large literature has argued that active interest rate feedback rules, that is, rules that respond to increases in inflation with a more than one-for-one...