The Welfare Cost of Fluctuations

The Welfare Cost of Fluctuations

Macroeconomic policy

Luis Bryce

Fall 2013

Suggested papers for presentations:

I-Government debt and fiscal policy

1)Debt overhang

Jean Imbs & Romain Rancière, 2005. “The Overhang Hangover”, Swiss Finance Institute Research Paper Series 06-03, Swiss Finance Institute

Giroud, Xavier, Mueller, Holger M., Stomper, Alex and Westerkamp, Arne, Snow and Leverage (October 2010). NBER Working Paper Series, Vol. w16497, pp. -, 2010.

2)Taxes: Ricardian equivalence and its limits

Bayoumi, Tamim & Masson, Paul R, 1998. "Liability-Creating versus Non-liability-Creating Fiscal Stabilisation Policies: Ricardian Equivalence, Fiscal Stabilisation, and EMU," Economic Journal, Royal Economic Society, vol. 108(449), pages 1026-45, July

Parker, Jonathan & Nicholas S. Souleles, David S. Johnson, Robert McClelland (2012). Consumer Spending and the Economic Stimulus Payments of 2008. Forthcoming, American Economic Review.

Bassetto, Marco and Narayana Kocherlakota (2004). On the irrelevance of government debt when taxes are distortionary. Journal of Monetary Economics.

3) The effect of government spending

Almunia, Miguel, Agustín S. Bénétrix, Barry Eichengreen, Kevin H. O’Rourke, and Gisela Rua (2009), “From Great Depression to Great Credit Crisis: Similarities, Differences and Lessons,” Economic Policy.

Antonio Acconcia & Giancarlo Corsetti & Saverio Simonelli, 2011. "Mafia and Public Spending: Evidence on the Fiscal Multiplier from a Quasi-experiment," CEPR Working Paper.

Ethan Ilzetzki, Enrique G. Mendoza, Carlos A. Vegh (2012). How Big (Small?) are Fiscal Multipliers? Journal of Monetary Economics.

Eggertsson, Gauti and Krugman, Paul (2010), “Debt, Deleveraging, and the Liquidity Trap”, Quarterly Journal of Economics.


VOX column:

4)The political economy of government spending

Alesina, Alberto, Ricardo Hausmann, Rudolf Hommes, and Ernesto Stein (2006). Budget institutions and fiscal performance in Latin America. Journal of Development Economics, vol. 59, pg. 253-273.

Perotti, Roberto and Yianos Kontopoulos (2002). Fragmented fiscal policy, vol. 86(2), pg. 191-222.


1)The balance-sheet channel

Ben Bernanke; Mark Gertler; Simon Gilchrist (1996), “The Financial Accelerator and the Flight to Quality”, The Review of Economics and Statistics, Vol. 78, No. 1. (Feb., 1996), pp. 1-15

Bernanke, Ben S & Gertler, Mark, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall

Gertler, Mark & Gilchrist, Simon, 1994. "Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 309-40, May

Campello, Graham and Harvey (2012), “The real effect of financial constraints: Evidence from a financial crisis”, Journal of Financial Economics.

Aghion, Marinescu, "Cyclical budgetary policy and growth: what do we learn from OECD panel data?", Macroeconomics Annual 2007, Volume 22 (p. 251 - 278)

2)The bank-lending channel

Puri, Rocholl and Steffen (2012) “Global retail lending in the aftermath of the US financial crisis: Distinguishing between supply and demand effects”, Journal of Financial Economics.

Adrian and Shin (2008), “Financial Intermediaries, Financial Stability, and Monetary Policy”

Schularick and Taylor (2012): “Credit booms gone bust: Monetary policy, leverage cycles and financial crises, 1870-2008”, forthcoming American Economic Review.

III-The crisis

1)The panic of 2007

Gorton and Metrick (2012), “Securitized banking and the run on repos”, Journal of Financial Economics.

Brunnermeier, Markus (2009), “Deciphering the Liquidity and Credit Crunch 2007–2008”, Journal of Economic Perspectives—Volume 23, Number 1—Winter 2009—Pages 77–100,

Nicola Gennaioli & Andrei Shleifer & Robert W. Vishny, 2011. A Model of Shadow Banking. The Journal of Finance.

Nicola Gennaioli & Andrei Shleifer & Robert W. Vishny, 2010. Neglected Risks, Financial Innovation, and Financial Fragility. Journal of Financial Economics.

2)Monetary policy during the crisis

Ben S. Bernanke & Vincent R. Reinhart & Brian P. Sack, 2004. "Monetary Policy Alternatives at the Zero Bound: An Empirical Assessment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(2), pages 1-100

Gauti B. Eggertsson, 2008. Great Expectations and the End of the Depression,American Economic Review.

Cecchetti (2008), “Monetary Policy and the Financial Crisis of 2007-2008”,

Annette Vissing-Jorgensen and Arvind Krishnamurthy (2011) The Effects of Quantitative Easing on Interest Rates: Channels and Implications for Policy, with Arvind Krishnamurthy, Brookings Papers on Economic Activity, Fall 2011.

3)Sovereign debt and banks

Reinhart and Rogoff (2011), “From financial crash to debt crisis”, American Economic Review.

Patrick Bolton & Olivier Jeanne, 2011. "Sovereign Default Risk and Bank Fragility in Financially Integrated Economies," NBER Working Papers 16899, National Bureau of Economic Research, Inc.

Nicola Gennaioli & Alberto Martin & Stefano Rossi, 2012. "Sovereign Default, Domestic Banks and Financial Institutions," Working Papers 622, Barcelona Graduate School of Economics.