Replication data for: The Power of Forward Guidance Revisited
- McKay, Alisdair
- Nakamura, Emi
- Steinsson, Jón
AbstractIn recent years, central banks have increasingly turned to forward guidance as a central tool of monetary policy. Standard monetary models imply that far future forward guidance has huge effects on current outcomes, and these effects grow with the horizon of the forward guidance. We present a model in which the power of forward guidance is highly sensitive to the assumption of complete markets. When agents face uninsurable income risk and borrowing constraints, a precautionary savings effect tempers their responses to changes in future interest rates. As a consequence, forward guidance has substantially less power to stimulate the economy.
Is supplement to
DOI: 10.1257/aer.20150063 (Text)
McKay, Alisdair, Emi Nakamura, and Jón Steinsson. “The Power of Forward Guidance Revisited.” American Economic Review 106, no. 10 (October 2016): 3133–58. https://doi.org/10.1257/aer.20150063.
- ID: 10.1257/aer.20150063 (DOI)
Update Metadata: 2020-05-18 | Issue Number: 2 | Registration Date: 2019-10-12