Objective
We plan to study the implications of financial market imperfections for four main questions.
First, how do financial imperfections affect the optimal conduct of monetary and exchange rate policy in open economies? A key insight is that we characterize financial frictions as endogenous and only occasionally binding. This can have important implications for the optimal conduct of stabilization policy.
Second, how do financial and labor market imperfections interact? We extend the standard search-and-matching model to allow firms to issue debt. This feature affects the wage bargaining process endogenously, since firms, by leveraging, can pay lower wages. We study the ability of such a model to replicate the volatility and persistence of unemployment in the data, and the role of financial imperfections in affecting the transmission of productivity and financial shocks.
Third, does the effectiveness of tax policy depend on its redistributive content, and how is this affected by financial imperfections? We characterize the distributional feature of several Tax Acts in the US, and investigate empirically whether tax changes that “favor the poor” are more expansionary than cuts that “favor the rich”. We then build a theoretical framework with heterogeneous agents and financial frictions to rationalize our evidence.
Fourth, how do financial intermediaries affect the transmission channel of monetary policy? We extend the current New Keynesian framework for monetary policy analysis to study the role of financial intermediaries. We emphasize the role of three features: (i) asymmetric information in interbank markets; (ii) maturity mismatch in the banks’ balance sheets; (iii) the “paradox of securitization”, thereby a deeper diversification of idiosyncratic risk leads to a simultaneous increase in the sensitivity of banks’ balance sheets to aggregate risk.
Fields of science (EuroSciVoc)
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
- social sciences economics and business economics production economics productivity
- social sciences sociology governance taxation
- social sciences economics and business business and management employment
- social sciences sociology social issues unemployment
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Programme(s)
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Topic(s)
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Call for proposal
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
ERC-2011-StG_20101124
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Funding Scheme
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Host institution
20136 Milano
Italy
The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.