Warsaw Economic Seminars – “Asset Supply and Liquidity Transformation in HANK” [23.03.2023]
We kindly invite you to take part in the next meeting within the Warsaw Economic Seminars series, organised jointly by the Faculty of Economic Sciences, University of Warsaw and the Warsaw School of Economics.
During the meeting Piotr Żoch, Ph.D. - Assistant Professor in the Department of Statistics and Econometrics of the Faculty of Economic Sciences, University of Warsaw will present the research “Asset Supply and Liquidity Transformation in HANK” conducted in cooperation with Yu-Ting Chiang (Federal Reserve Bank of St. Louis).
The seminar will take place on March 23rd 2023 at 5:10 p.m. in room 3B, building C at SGH Warsaw School of Economics (al. Niepodległości 162).
Abstract:
We study how the financial sector affects fiscal and monetary policy in heterogeneous agent New Keynesian (HANK) economies. We show that, in a large class of models of financial intermediation, relevant features of the financial sector are summarized by the elasticities of a liquid asset supply function. The financial sector in these models affects aggregate responses only through its ability to perform liquidity transformation (i.e., issue liquid assets to finance illiquid capital). If liquid asset supply responds inelastically to returns on capital (low cross-price elasticities), disturbances in the liquid asset market generate large responses in aggregate demand through adjustments in capital prices. Assumptions about the financial sector are not innocuous quantitatively. In commonly used setups that imply different liquid asset supply elasticities, aggregate output responses to an unexpected deficit-financed government transfer can differ by a factor of three.
The calendar of all seminars within the Warsaw Economic Seminars series is available on the website: https://sites.google.com/site/warsaweconseminars/calendar
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The aim of the Warsaw Economic Seminars series is to create a platform for researchers and specialists from all over the world to present their research and share knowledge on economics and economic policy.
The participants can both listen to presentations and take part in discussions and present their own research to get feedback from other researchers and students.
