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Money versus debt financed regime: Evidence from an estimated DSGE model

Chiara Punzo and Giulia Rivolta ()

No def120, DISCE - Working Papers del Dipartimento di Economia e Finanza from Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE)

Abstract: We estimate a money- nancing versus debt- nancing medium-scale dynamic stochastic general equilibrium for the US with Borrower-Saver framework. Our results suggest that the share of net borrowers in a MF regime (17%) is lower than the one in a DF regime (19%). The MF regime enhances the positive e¤ects of scal and risk premium shocks with respect to the DF regime. After an inationary shock the MF regime leads to a mild recession while the DF regime leads to a temporary expansion followed by a sharp recession. The scal shock mainly explains the variance in output and borrowers consumption in a MF regime. The variance of the savers consumption remains mainly linked to the risk premium shock in both regimes. In a DF regime, the wage mark-up shock plays the major role.

Keywords: Borrowers-Savers; Bayesian Estimation; Monetary Policy. (search for similar items in EconPapers)
JEL-codes: E32 E42 E52 (search for similar items in EconPapers)
Pages: 36
Date: 2022-11
New Economics Papers: this item is included in nep-ban, nep-dge and nep-mon
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