Macroeconomics Seminar Series. "Identification of Systematic Monetary Policy", with Lukas Hack and Matthias Meier
Published: 17 September 2024
03 October 2024. Dr Klodiana Istrefi, Banque de France
Dr Klodiana Istrefi, Banque de France
"Identification of Systematic Monetary Policy", with Lukas Hack and Matthias Meier
Thursday, 03 October 2024. 15:00-16:30
Room 208, McIntyre Building
Abstract
We propose a novel identification design to estimate the effects of systematic monetary policy on the propagation of macroeconomic shocks. The design combines (i) a time-varying measure of systematic monetary policy based on the historical composition of hawks and doves in the FOMC with (ii) an instrument that leverages the FOMC rotation of voting rights. We apply our design to government spending shocks. We find that a dovish FOMC supports the expansionary effects of higher spending by delaying policy rate hikes, leading to large fiscal multipliers. GDP does not expand when the FOMC is hawkish, but inflation expectations are contained.
Bio
Klodiana Istrefi is a Senior Economist at Banque de France, a CEPR Research Affiliate and an Associate Editor for the International Journal of Central Banking. Since 2019, she is also a lecturer at Paris School of Economics. During 2023, she visited the DG Research at the ECB. She holds a Ph.D. in Economics from Goethe University Frankfurt. Her research focuses on central bank communication and monetary policy uncertainty.
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First published: 17 September 2024
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