Macro/Trade Seminar | Flight to Safety in a New Keynesian Model by Sebastian Merkel – School of Economics Macro/Trade Seminar | Flight to Safety in a New Keynesian Model by Sebastian Merkel – School of Economics

Macro/Trade Seminar | Flight to Safety in a New Keynesian Model by Sebastian Merkel

School of Economics

 

 Invites you to a

Macroeconomics and Trade seminar presented by

Sebastian Merkel
(University of Exeter Business School)

 

Flight to Safety in a New Keynesian Model

Wednesday 15 November 2023

2:00pm – 3.30pm

Level 6 Seminar Room (650)

A02 Social Sciences Building
Camperdown Campus

The University of Sydney NSW 2006

 Zoom: 814 4903 8736

Passcode: 594880

This paper builds a tractable New Keynesian model with idiosyncratic risk, incomplete markets, and nominal safe assets to study the transmission of uncertainty shocks through investors’ portfolio decisions and how monetary-fiscal policy can stabilize fluctuations in the demand for safe assets. In response to a sudden increase in uncertainty, investors reallocate their portfolios from productive assets to safe assets for precautionary reasons. Stickiness of nominal prices prevent adjustments in the real value of nominal safe assets. Instead, the adjustment pressures generate an aggregate demand recession and undershooting in the price of productive capital assets. Conventional monetary policy that operates through interest rate changes alone has limited power in influencing household portfolios. Instead, fiscal policy plays a crucial role in price stabilization and optimal policy.

For further information contact: Macroeconomics and Trade seminar series coordinator Dr James Graham (james.a.graham@sydney.edu.au)

For all upcoming seminars in School of Economics see Our events and Calendar

Date

Nov 15 2023
Expired!

Time

2:00 pm - 3:30 pm

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