The Discounted Euler Equation
A Note
Bibliographic Data
| ID | 9723172 |
|---|---|
| Authors | Alisdair Mckay (Boston University), Emi Nakamura (0009-0002-5022-6633, Columbia University), Jón Steinsson (Columbia University) |
| Year | 2017 |
| Volume | 84 |
| Issue | 336 |
| Pages | 820-831 |
| Publication date | 2017-10-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/ecca.12226 |
| OpenAlex | W3023832292 |
| Language | EN |
| Citations received | 4 |
| References cited | 14 |
We present a simple model with income risk and borrowing constraints that yields a ‘discounted Euler equation’. This feature of the model mutes the extent to which news about far future real interest rates (i.e. forward guidance) affects current outcomes. We show that this simple model approximates the outcomes of a rich model with uninsurable income risk and borrowing constraints in response to a forward guidance shock. The model is simple enough to be easily incorporated into simple New Keynesian models. We illustrate this with an application to the zero lower bound
Econometrics · Economics · Euler equations · Forward guidance · Inflation targeting · Interest rate · Keynesian economics · Macroeconomics · Mathematical analysis · Mathematical economics · Monetary policy · New Keynesian economics · Risk model · Shock (circulatory) · Simple (philosophy) · Zero (linguistics) · Zero lower bound · Applied Mathematics · Economic theories and models · Economic Theory and Policy · Mathematics · Monetary Policy and Economic Impact
| Unique citing works | 4 |
|---|---|
| Citations per year | 0,5 |
| Citation span | 2018 - 2024 (7) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 4 |