Cyclical Risk Aversion, Precautionary Saving, and Monetary Policy

Material TypeArticleLanguageEnglish
TitleCyclical Risk Aversion, Precautionary Saving, and Monetary Policy Author(S)BIANCA DE PAOLI (Author)
Abstract  This paper analyzes the conduct of monetary policy in an environment in which cyclical swings in risk appetite affect households’ propensity to save. It uses a New Keynesian model featuring external habit formation to show that taking note of precautionary saving motives justifies an accommodative policy bias in the face of persistent, adverse disturbances. ...Paginationp 1-36
SubjectEconomicsDescriptorsMonetary policy
Journal TitleJournal of Money, Credit, and Banking  
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