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Title: Essays in macroeconomics
Author: Wanengkirtyo, Boromeus Wirotomo
ISNI:       0000 0004 6062 3891
Awarding Body: University of Warwick
Current Institution: University of Warwick
Date of Award: 2016
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Broadly, the first two chapters analyse two novel sources of economic fluctuations, and the last chapter quantifies how the traditional monetary policy tradeoffs is affected by a mandate to stabilise financial variables. The first chapter focuses on the macroeconomic effects by variations in the range of available goods produced. Previous work that analysed the real effects of financial shocks only considered the effect on the production of existing goods. Firms can also invest into production lines of new goods. A credit contraction reduce investment into new products, leading to lower competition and higher markups. This decreases consumption demand, as well as lowering labour demand and wages, reducing household income. This amplifies the response of consumption to financial shocks (19% more volatile). The DSGE model is able to match the VAR impulse responses on the predicted channels. The second chapter resurrects the question if improved business practices contributed to the Great Moderation. While previous studies only examine inventory management, we analyse the role of supply chain management on enhancing production coordination across firms. VAR counterfactuals suggest that improved business practices have dampened order volatility by 40-50%. We therefore determine that better business practices contributed a significant 20-25% of the Great Moderation. The third chapter shows how a policy of ‘leaning against the wind’ affects the traditional monetary policy tradeoff. An estimated, modified Gertler and Karadi (2011) model is used to compute optimal monetary policy under commitment for a range of central bank objectives. The main findings are that increased regard for financial variables: (a) makes price stability increasingly costly in terms of output stabilisation; (b) raises the cost of output and inflation volatility, in reducing financial volatility; (c) depend crucially on the underlying disturbance, and on the financial variable that policy aims to stabilise.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: HB Economic Theory