Warsaw Economic Seminars – “A Theory of the Procyclical Effectiveness of Forward Guidance” [12.01.2023]
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 Paweł Kopiec, Ph.D. assistant professor in Department of Quantitative Economics at the SGH Warsaw School of Economics will present the study “A Theory of the Procyclical Effectiveness of Forward Guidance”.
Abstract:
This study examines the dependence of forward guidance effectiveness on the level of economic slack. Employing a model with price rigidities and uninsured unemployment risk, I apply analytical and numerical methods to study the forward guidance transmission in “normal times” and the crisis during which the unemployment rate rises by 150%. High unemployment accompanied by low job-finding rates increases unemployment risk and precautionary motives, which constrains the monetary authority’s ability to boost current demand by announcing cuts in future policy rates. The severity of this limitation increases with the time horizon of the announced change in interest rate. Quantitatively, the drop in the interest rate elasticity of aggregate consumption between the horizon of the interest rate cut equal to zero (i.e., the standard monetary policy shock) and the horizon equal to 15 quarters is 35.3% larger during the crisis than in “normal times.” These more pronounced horizon effects imply that forward guidance effectiveness is generally lower in crisis than in “normal times.”
The seminar will take place on January 12th 2023 at 5 p.m. in hybrid mode: in room B202 at the Faculty of Economic Sciences, University of Warsaw (Długa 44/50) and via Zoom platform.
Link to the meeting:
https://uw-edu-pl.zoom.us/j/94952861067?pwd=eWFxK0N3SWJJdUNtZUQ4RDYxQ1loZz09
Meeting ID: 949 5286 1067
Passcode: 149259
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.
