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dc.contributor.authorNgo, Phuong V.en_US
dc.date.accessioned2016-01-27T19:20:16Z
dc.date.available2016-01-27T19:20:16Z
dc.date.issued2013
dc.identifier.urihttps://hdl.handle.net/2144/14113
dc.description.abstractThis dissertation consists of three essays on monetary economics. The first two essays have a focus on the zero lower bound on the nominal interest rate (ZLB) and the Great Recession. In the first essay, I investigate optimal discretionary monetary policy under the ZLB in the case of a distorted steady state due to monopoly and taxation. I find that the central bank in a more distorted economy would cut the interest rate less aggressively under a particular adverse demand shock. This occurs because the ZLB is less likely to bind and the economy escapes from the ZLB sooner. In addition, I show that the conventional linear-quadratic method is not accurate when the ZLB binds. In the second essay, I model the role of subprime lending, deleveraging and an incomplete financial market in driving an economy to the liquidity trap with binding ZLB. There are two key features that differentiate my work from the current literature of deleveraging and the ZLB. First, I endogenize the debt limit of borrowing-constrained households by tying it to the market value of collateral assets. Second and more importantly, I allow for subprime lending. I am able to show that the second feature drives the economy to the ZLB more likely under an adverse shock to the credit market. When the ZLB binds, a great recession emerges with a free fall in output and the price level, mostly due to the Fisherian debt deflation that puts more debt burden on the borrowers. The third essay examines the role of habit formation in solving the persistence problem - output response is transient and not hump-shaped under a monetary shock - in the conventional state dependent pricing model. Intuitively, incorporating habit formation makes consumers less aggressive in spending under a shock, resulting in more persistent response of output. With a moderate habit formation, I am able to show that the model produces hump-shaped and very persistent response of output under a monetary growth shock.en_US
dc.language.isoen_US
dc.subjectEconomicsen_US
dc.subjectZLBen_US
dc.subjectDeleveragingen_US
dc.subjectHabit formationen_US
dc.subjectMonetary policyen_US
dc.subjectPrice adjustmentsen_US
dc.subjectSubprime lendingen_US
dc.titleEssays on monetary economicsen_US
dc.typeThesis/Dissertationen_US
dc.date.updated2016-01-22T18:53:55Z
etd.degree.nameMaster of Arts/Doctor of Philosophyen_US
etd.degree.levelmastersen_US
etd.degree.disciplineEconomicsen_US
etd.degree.grantorBoston Universityen_US


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