Savings dampen monetary policy effectiveness – Fed paper
Central banks should track excess saving at a high frequency, authors recommend
Household excess savings dampen monetary policy’s effects on economic activity and inflation, researchers from the Federal Reserve Board find. They say this effect was particularly apparent during the pandemic period.
The paper was written by Thiago Ferreira, Nils Gornemann, and Julio Ortiz. They examine euro-area economies using a New Keynesian model, considering the bloc in aggregate and analysing data from four individual countries: Germany, Italy, France, and Spain.
“Monetary policy
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