Exercícios Resolvidos Politica Monetaria - Curvas Phillips e Regra de Taylor

Política Monetária 1 In the following situations derive the MR curve using Phillips curves and the central banks loss ellipses a When 𝛼 1 and 𝛽 1 b When 𝛼 1 and 𝛽 1 c When 𝛼 1 and 𝛽 1 d How can 𝛼 and 𝛽 be interpreted in items b and c and what they suggest for the central banks best response to an inflation shock 2 Consider the equation of the best response Taylor rule a What can we interpret about the central banks preferences from the loss function above b How this loss function compares to the standard loss function c How this loss function compares to a loss function with 𝑦 𝑇 𝑦𝑒 c Find the inflation bias for a central bank with this loss function You must respond the following items to show the logic behind the equation a Use the ISPCMR diagrams to show how the initial interest rate response to an inflation shock varies with the slope of the MR b What parameters affect the slope of the MR c Are your findings consistent with the best response Taylor rule equation d Explain how the Taylor rule could find the best response nominal interest rate to be negative 3 Use a PCMR diagram to show that the cumulative unemployment caused by disinflation is independent of the degree of inflation aversion 𝛽 of the central bank a How does this finding change if the Phillips curves are convex b And if the Phillips curves are steeper ie 𝛼 4 Consider a central bank with the following loss function Problems and questions for discussion1 1 Pick an economy outside of the US the Eurozone the UK and Japan with an inflation targeting central bank Use their central banks website to gather information on interest rates and total assets for the period from 2006 to 2011 Present the data in a graph as Fig 137 Use the graph to answer the following questions a Did the central bank hit the zero nominal bound during the Great Recession If so did they employ quantitative easing b Use your own knowledge and macroeconomic indicators eg from the IMF World Economic Outlook Database to provide a picture of your chosen economy before and during the crisis Does this help to shed light on why it did or did not reach the ZLB during the global financial crisis Hint think about your chosen economys strength entering the recession the severity of their recession other policies used to stimulate demand eg fiscal policy their reliance on exports etc Política Fiscal 1 Explain in words the intuition behind the debt dynamics equation 𝑏 𝑑 𝑟 𝛾𝑦 𝑏 2 In the following items discuss how each can help reduce the debt burden on governments and the problems associated with each method a reducing the primary deficit 𝑑 b increasing the growth rate 𝛾𝑦 c reducing the interest rate 𝑟 d reducing the existing stock of debt 𝑏 3 Assume an economy with lumpsum taxes A large negative demand shock hits this economy As a result the government announces a large fiscal stimulus package to stimulate economic activity and help stabilize it Evaluate whether the policy will be successful in each of the following scenarios a In the 3equation model when stimulus is financed through borrowing b In the 3equation model when the stimulus is financed by raising taxes ie a balanced budget expansion c In the REPlH model when the stimulus is financed through borrowing 4 Explain in words what is meant by the prudent fiscal policy rule What is the main reason for tax smoothing 5 Under the prudent fiscal policy rule how should a government react in the following scenarios a Because of the end of the Cold War defense spending will be reduced in the near future b The government compensates farmers following a disease outbreak c The Treasury releases a report forecasting that the cost of the taxfunded health service will treble within twenty years d The government decides to contribute troops to a war that it expects to be over in a matter of weeks 6 Use the 3equation model to discuss whether contractionary fiscal policy should be used in the following situation the economy is initially at equilibrium and there is a positive shock to aggregate demand from improved consumer confidence Problems and questions for discussion1 1 This question uses the UK Office for Budget Responsibilitys OBRs 2011 Fiscal Sustainability Report July 2011 The report can be downloaded from the publications section of the OBR website httpsobrukfrsfiscalsustainabilityreportjuly2011 Table 51 on page 112 shows the adjustment to the primary balance needed to ensure the longterm sustainability of the public finances How do each of the following factors affect the extent of adjustment ie tightening required to reach the target debt to GDP ratio by 2060 In each case you must give an explanation of how you think the factor influences the debt dynamics equation 149 a increased health spending b interest rates c productivity d migration e age structure f lower morbidity rates Modelos RBC e Novos Keynesianos 1 About the Solow residual answer the following a Explain in words its concept b Use the production function to derive an equation for the Solow residual c Are there any problems with using the Solow residual as a proxy for technology shocks in the RBC model 2 Use a diagram as per Fig 164 to explain the movements of the labour supply and demand curves after a negative technology shock What might constitute a negative technology shock 3 Write out the equations for the adaptive expectations and New Keynesian Phillips curves and use them to answer the following a What are the main differences between the two b Explain the costs associated with disinflations 4 This question requires using the 3equation and New Keynesian models to analyze the adjustment of the economy after a negative demand shock Assume the economy is initially in equilibrium and the negative output gap lasts for a set amount of time a Draw the impulse response functions for inflation and the output gap for each model as per Fig 166 b Explain why the paths of inflation are different in each model c How would the adjustment path change for the 3equation model if a proportion of households exhibit permanent income behavior and have rational expectations This question focuses on the predictions of the 3equation and NK models and how they compare to the realworld data Use Section 163 and your own analysis to answer the following questions a What do the two models predict should have happened to inflation during the global financial crisis ie a large negative output gap that is expected to persist for a number of periods b Choose two OECD economies and use the OECDStat website to download inflation data from 2006 to the end of 2011 Plot this data on a graph Describe the path of inflation for each of these economies over the period c Does the data more closely match the predictions of the 3equation model or the NK model Are there significant differences across the two countries d What other factors might have influenced the path of inflation in these countries over this period 2 Macroeconomic policy is about controlling the economy in the sense of keeping it close to the constant inflation equilibrium Read the following statement and answer the accompanying questions when thinking of controlling a classroom full of children one would probably think it wise to base classroom rules on the actual behavior of children rather than on how they would behave if they solved a forwardlooking problem a Does the line of reasoning in the statement have any implications for the RBC and NK DSGE models Hint think about the assumptions behind the models b Are there any insights from the microeconomic literature on behavioral economics that would suggest that the RBC and NK DSGE models place too much weight on agents solving complicated problems forward over distant time horizons Hint a useful starting point is the work of Nobel Prize winners Daniel Kahnemann and Amos Tversky