Stabilizing an unstable economy: Fiscal and monetary policy, stocks, and the term structure of interest rates
Monetary and fiscal policy measures have been applied in order to avert the financial market collapse and counteract the global recession. In this paper we present an integrated macromodel which in particular focuses on the financial markets. We use a Tobin-like macroeconomic portfolio approach, and the interaction of heterogeneous agents on the financial market to characterize the potential for financial market instability. We show that specific but unorthodox fiscal and monetary policies have to be used to stabilize such unstable macroeconomies.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Christina D. Romer, 1991.
"What Ended the Great Depression?,"
NBER Working Papers
3829, National Bureau of Economic Research, Inc.
- Farmer, Roger E.A., 2010. "How to reduce unemployment: A new policy proposal," Journal of Monetary Economics, Elsevier, vol. 57(5), pages 557-572, July.
- Tobin, James, 1982.
"Money and Finance in the Macroeconomic Process,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 14(2), pages 171-204, May.
- Tobin, James, 1981. "Money and Finance in the Macro-Economic Process," Nobel Prize in Economics documents 1981-1, Nobel Prize Committee.
- James Tobin, 1982. "Money and Finance in the Macro-Economic Process," Cowles Foundation Discussion Papers 613R, Cowles Foundation for Research in Economics, Yale University.
- Asada, Toichiro & Chiarella, Carl & Flaschel, Peter & Mouakil, Tarik & Proaño, Christian R., 2010.
"Stabilizing an unstable economy: On the choice of proper policy measures,"
Economics - The Open-Access, Open-Assessment E-Journal,
Kiel Institute for the World Economy, vol. 4, pages 1-43.
- Asada, Toichiro & Chiarella, Carl & Flaschel, Peter & Mouakil, Tarik & Proaño, Christian R., 2009. "Stabilizing an unstable economy: on the choice of proper policy measures," Economics Discussion Papers 2009-50, Kiel Institute for the World Economy.
- Chiarella, Carl & Flaschel, Peter & Wells, Graeme, 2003.
"The Dynamics Of Keynesian Monetary Growth,"
Cambridge University Press, vol. 7(03), pages 473-475, June.
- Blanchard, Olivier J, 1981. "Output, the Stock Market, and Interest Rates," American Economic Review, American Economic Association, vol. 71(1), pages 132-43, March.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "This Time Is Different: Eight Centuries of Financial Folly," Economics Books, Princeton University Press, edition 1, volume 1, number 8973.
- Sargent, Thomas J & Wallace, Neil, 1973. "The Stability of Models of Money and Growth with Perfect Foresight," Econometrica, Econometric Society, vol. 41(6), pages 1043-48, November.
When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:28:y:2011:i:5:p:2129-2136. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.