000			01699nam a22001577a 4500
999			_c517117 _d517117
008			210701b ||||| |||| 00| 0 eng d
100			_aChalle, Edouard _926136
245			_aUninsured unemployment risk and optimal monetary policy in a zero-liquidity economy
260			_aAmerican Economic Journal Macroeconomic
300			_a12(2), Apr, 2020: p.241-283
520			_aI study optimal monetary policy in a sticky-price economy wherein households precautionary-save against uninsured, endogenous unemployment risk. In this economy greater unemployment risk raises desired savings, causing aggregate demand to fall and feed back to greater unemployment risk. This deflationary spiral is constrained inefficient and calls for an accommodative monetary policy response: after a contractionary aggregate shock the policy rate should be kept significantly lower and for longer than in the perfect-insurance benchmark. For example, the usual prescription obtained under perfect insurance of a hike in the policy rate in the face of a bad supply (i.e., productivity or cost-push) shock is easily overturned. The optimal policy breaks the deflationary spiral and takes the dynamics of the imperfect-insurance economy close to that of the perfect-insurance benchmark. These results are derived in an economy with zero asset supply (zero liquidity) and are thus independent of any redistributive effect of monetary policy on household wealth. – Reproduced
650			_aEmployment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity _926137
773			_aAmerican Economic Journal Macroeconomic
906			_aEMPLOYMENT
942			_cAR