The walking dead Euler equation - Addressing a challenge to monetary policy models

Aurélien Poissonnier

Documents de Travail de l'Insee - INSEE Working Papers from Institut National de la Statistique et des Etudes Economiques

Abstract: Despite some strong cases built against it, the Euler equation on consumption remains a cornerstone of monetary policy models. In this paper I test the representative household's consumption-savings trade-off in two original directions. I first use households' specific interest rates for both US and France. These rates have a better explanatory power of the representative consumer's behaviour than the monetary policy rate. I also use a less restrictive approach to measure households' expectations based on survey data. However, the challenge posed by the Euler equation to monetary policy models remains.

Keywords: Euler equation; consumption (search for similar items in EconPapers)
JEL-codes: D91 E21 (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.bnsp.insee.fr/ark:/12148/bc6p06zr9nw/f1.pdf Document de travail de la DESE numéro G2015-01 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nse:doctra:g2015-01

Access Statistics for this paper

More papers in Documents de Travail de l'Insee - INSEE Working Papers from Institut National de la Statistique et des Etudes Economiques Contact information at EDIRC.
Bibliographic data for series maintained by INSEE ().