Why fiscal stimulus programs fail . Volume 1 The limits of accomodative monetary policy in practice / / John J. Heim

• Autore: Heim John J.
• Pubblicazione: Cham, Switzerland : , : Springer, , [2021]; ©2021
• Descrizione fisica: 1 online resource (584 pages) : illustrations
• Disciplina: 336.390973
• Soggetto topico: Monetary policy - United States; Fiscal policy - United States
• Soggetto geografico: United States Economic conditions
• Nota di bibliografia: Includes bibliographical references and index.
• Nota di contenuto: Intro -- Preface -- Contents -- List of Figures -- List of Tables -- Part I Introductory Chapters -- 1 Introduction -- 1.1 The Crowd Out Problem and Accommodative Monetary Policy -- 1.2 Individual Chapter Contents and Findings -- 1.3 Summary of Key Findings -- References -- 2 Literature Review -- 2.1 Summary of Findings -- 2.1.1 Stocks and Bonds -- 2.1.2 GDP -- 2.1.3 Inequality -- 2.2 Detailed Findings -- 2.2.1 Assessment of Monetary Policy Effectiveness in the Business Press -- Stock Market Effects -- Bond Market Effects -- GDP Effects -- Inequality Effects -- 2.2.2 Assessment of Monetary Policy Effectiveness in the Academic/Professional Literature -- Stock Market Effects -- Bond Market Effects -- Interest Rate Effects -- GDP Effects -- Effects on Inequality -- 2.2.3 Comparisons of Findings of the Professional and Business Press -- 2.3 A Comparison of Cowles, DSGE, and VAR Methodologies Used in Literature Review -- References -- 3 Methodology -- 3.1 General Methodological Issues -- 3.1.1 The Importance of Replicating Results Before Publication -- 3.2 Other Methodological Issues Specific to This Study -- 3.2.1 GDP Deflator Methodological Adjustments -- 3.2.2 Reconciling Differences in Signs, Significance Levels of Tests in Different Time Periods -- 3.2.3 Mixing Periods of Budget Deficit (Crowd Out) Increase and Decrease -- 3.2.4 Statistical Insignificance Caused by Lack of Variation in the Data -- 3.2.5 Left-Out Variables -- 3.2.6 Multicollinearity -- 3.2.7 Insufficient Sample Size -- 3.2.8 Spurious Results Indicating Insignificance -- 3.3 How Should a Change in Loanable Funds Be Distributed to Tax and Spending Deficits -- References -- Part II Theory of Crowd Out and Accommodative Monetary Policy -- 4 Theory of Crowd Out and Accommodative Monetary Policy. ; 4.1 How, and Under What Conditions, Can Federal Reserve Purchases of Government Securities Stimulate the Economy -- 4.1.1 Overview -- 4.1.2 Detailed Analysis of the Crowd Out and Accommodative Monetary Policy Processes -- Accommodative Federal Reserve Purchases from Depository Institutions -- Federal Reserve Purchases from Non-depository Institutions -- 4.2 A Formal Model of the Effects of Fiscal Stimulus Programs, Their Crowd Out Effects, and Accommodative Monetary Policy -- 4.2.1 Crowd Out Effects of Deficit Financing -- 4.2.2 How Accommodating Monetary Policy Offsets Crowd Out Effects -- 4.2.3 Different Crowd Out Effects of Tax Cut and Spending Deficits -- Alternative Ways of Modeling Crowd Out Effects -- 4.2.4 Declining Deficits Create "Crowd in" Effects -- 4.2.5 Should We Use Accommodate Monetary Policy to Offset Crowd Out? -- References -- 5 A Simplified Balance Sheet View of How Open Market Operations to Stimulate the Economy, When Dominated by Primary Dealers, Actually Stimulate Securities Markets, not the Real Economy -- 5.1 When the FR Goes into the Open Market and Buys 1000 in Treasuries (T) from a Dealer/Broker (Usually a "Primary Dealer"), The Dealer May Be Paid by Check Drawn on the FR (FRck) (If Dealer Is Paid Electronically by Fed Transfer of Funds to Dealer's Bank, Skip Steps 5.1-3 and Go to Step #5.4) -- 5.2 Dealer #1Deposits FR Check in Dealer's Own Bank -- 5.3 Bond Dealer's Bank Cashes in the FRck at the Fed. Assume Required Reserve Ratio (RR) = 10% and Let Excess Reserves = (ER). ; 5.4 Bond Dealers Make Their Money Buying and Selling Bonds. Bond Dealers (Generally) Would Have no Incentive to Sell Treasuries to the FR, Except to Obtain the Funds Needed to Buy Another Security (Alt Sec) Expected to Pay a Higher Return. This Is Bought from Dealer #2 by Dealer #1 and Paid for with DD (Step Involving Check Payment, and Conversion to Reserves not Shown) -- 5.5 Bond Dealer #2 (Generally) Only Sold Alt Sec to the First Dealer Because Dealer #2 Needed the Liquidity to Buy Another Security (Alt Sec2) that Looked More Promising, Which Dealer #2 then Bought from Bond Dealer #3 Using the Proceeds of the Sale of Alt Sec to Dealer #1 to Finance the Purchase of Alt Sec2. the Cycle Continues in Perpetuity Until no Other Dealers Wish to Sell Securities at This Time. Results for Dealers #2 and #3 and #4 Are Shown Below (with Some Check & -- Reserves Movement Inte -- 5.6 The Final Result Is Shown Below, After All Intermediate Steps Above Are Cancelled Out, and Assuming Bond Dealer #4 Cannot or Does not Want to Find Any Other Dealer/Broker with Desirable Securities to Buy -- References -- 6 A Money Multiplier Approach to How Open Market Operations Stimulate Securities Markets and the Real Economy -- 6.1 Simple Money Multiplier -- 6.2 A More Sophisticated Money Multiplier -- References -- Part III The Effectiveness of Accommodating Monetary Policy Mechanics -- 7 The Role of Primary Dealers in Federal Reserve Efforts to Change the Money Supply -- 7.1 Primary Dealers Dominate Auctions -- 7.2 What Type of Bank Does the Federal Reserve Purchase Securities from: Investment or Depository? -- 7.3 The Failure of Federal Reserve Securities Purchases During "QE" to Reduce Depository Institutions Holdings of Government Securities, Which Would Have Increased Their Loanable Funds -- 7.4 Primary Dealers and the Business They Are in: Selected Years 1960-2014. ; 7.5 Loss of Efficiency When Using Investment Banks and Brokerages to Implement Accommodative Monetary Policy -- 7.6 Primary Dealers Who Are Domestic Vs. Foreign Corporations -- References -- 8 The Failure of Accommodative Monetary Policy Before Quantitative Easing (QE) and Its Success After -- the "Pushing on a String Problem" -- 8.1 Effectiveness of Accommodative Monetary Policy 1960-2007 -- 8.2 Effectiveness of Accommodative Monetary Policy 2008-Present -- 8.3 Does "Pushing on a String" During QE Apply to M1 as Well as Total Loanable Funds? -- 8.4 Conclusions -- References -- 9 The Failure of U.S. Loanable Funds to Grow as Much as Federal Reserve Securities Purchases During QE: The Role of Foreign Banks -- 9.1 The Textbook Equivalence of Increases in FR Securities Purchases and Increases in Loanable Reserves -- 9.2 The Effects of Fed Purchases of Securities from Foreign Dealer/Brokers -- 9.3 Trends Since 1960 in M1, Excess Reserves and Currency in Circulation -- References -- Part IV Increases in M1-Effects on Stock and Bond Markets and the GDP -- 10 Effect of FR Purchases of Government Securities on M1 -- 10.1 Relationship of M1 Growth to Growth in Securities Purchased by the Fed -- 10.2 More Sophisticated Models of the Relationship Between FR Securities Purchases and M1 -- 10.3 Tests of the Relationship Between M1 and Excess Reserves and FR Securities Purchases -- 10.4 Relationship of Growth in M1 to Growth in the Monetary Base -- 10.5 The Most Theory Consistent Model of M1's Determinants -- 10.6 Summary of Results of Tests of Relationship of Changes in FR Purchases to Changes in M1 -- References -- 11 Effect of Increases in Loanable Funds or M1 on the GDP -- 11.1 Simple Tests -- 11.2 More Sophisticated Tests of the Effects of FR Security Purchases on Real GDP -- 11.2.1 Summary of Table 11.1 Findings. ; 11.3 Testing Housing and Consumer Services Demand for Sensitivity to FR Securities Purchases -- 11.3.1 Housing Investment Effects -- 11.3.2 Lagged Consumer Services Spending Effects -- 11.3.3 Total Consumer and Investment Spending Effects -- 11.3.4 Full GDP Effects -- 11.4 Summary of Results and Conclusions -- References -- 12 Effect of FR Security Purchases and M1 on Stock, Bond, and Mortgage Markets -- 12.1 Effect of FR Open Market Operations on the Stock Market -- 12.2 Effect of FR Open Market Operations on Bond and Mortgage Markets -- 12.3 Do FR Open Market Operations also Affect GDP -- 12.4 Summary of Findings and Conclusions -- References -- Part V Does Crowd Out Really Occur? -- 13 Does Crowd Out Really Occur? Initial Empirical Evidence: One Time Period -- 13.1 Consumption -- 13.2 Investment -- 13.3 Conclusion -- References -- 14 Does Crowd Out Really Occur? Empirical Evidence: Replication in Many Time Periods -- 14.1 The Heim (2017b) Study -- 14.2 The Heim (2017a) Study -- 14.3 Crowd Out Findings in This Study -- References -- Part VI Increases in Total Loanable Funds (S+FB)-Do They Reduce Crowd Out? -- 15 Initial Tests of Whether Crowd Out Can Be Offset by Increases in Loanable Funds -- 15.1 Methodology for Testing Increases in Loanable Funds as an Offset to Consumption Crowd Out -- 15.2 Taxes: Another Variable That Has Both Positive and Negative Effects on Consumption -- 15.3 Methodology for Testing Increases in Loanable Funds as an Offset to Investment Crowd Out -- 15.4 Conclusions -- References -- 16 Which Models Best Explain How Changes in Loanable Funds Offset Crowd Out? -- 16.1 Effects on the Consumption Function -- 16.2 Effects on the Investment Function -- References -- 17 Do Loanable Funds Modify the Crowd Out Effects of the One-Variable Deficit (T - G)? -- 17.1 Consumption Results When also Including (S + FB) as a Separate Variable. ; 17.2 Consumption Results When not Including (S + FB) as a Separate Variable.
• Titolo autorizzato: Why fiscal stimulus programs fail
• ISBN: 3-030-65675-6
• Formato: Materiale a stampa
• Livello bibliografico: Monografia
• Lingua di pubblicazione: Inglese
• Record Nr.: 9910483134503321
• Lo trovi qui: Univ. Federico II