The power of forward guidance in a quantitative TANK model

Rafael Gerke, Sebastian Giesen and F. Alexander Scheer

No 03/2020, Discussion Papers from Deutsche Bundesbank

Abstract: We quantify the macroeconomic effects of interest rate forward guidance in an estimated medium-scale two-agent New Keynesian (TANK) model. In general, such models can dampen or amplify the power of forward guidance compared to a representative agent model. Our empirical estimates indicate a dampening, as there is sufficient countercyclical redistribution.An interaction with asset purchases gives rise to non-linear effects that depend on the horizon of forward guidance.

Keywords: Forward Guidance; Hand-to-mouth households; Redistribution; Bayesian Estimation; Asset purchase program (search for similar items in EconPapers)
JEL-codes: E44 E52 E62 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac, nep-mon and nep-ore
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Citations: View citations in EconPapers (9)

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Journal Article: The power of forward guidance in a quantitative TANK model (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdps:032020

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