News from Jul 01, 2016
Next week, Prof. Lutz Weinke, Ph.D. of Humboldt Universität zu Berlin will be the speaker of the Quantitative Economic Colloquium. He will present his research paper "Agency Costs and the Monetary Transmission Mechanism" on Thursday, July 7, 5:15-6:45 pm at Kaminzimmer (R 202), Boltzmannstraße 20, Berlin-Dahlem.
Once New Keynesian (NK) theory (see, e.g., Woodford 2003) is combined with a standard model of investment (see, e.g., Thomas 2002), the resulting framework loses its ability to generate a realistic monetary transmission mechanism. This is the puzzle uncovered in Reiter et al. (2013). The simple economic reason behind it is the unrealistically large interest rate elasticity of investment, as implied by standard investment theory. In order to address this puzzle we develop a NK model featuring fully exible investment combined with a nancial friction in the spirit of Carlstrom and Fuerst (1997). This model is used to isolate the quantitative importance of the nancial friction for the monetary transmission mechanism.
For further information about the Quantitative Economic Colloquium and its program, please click here.