Optimal Portfolio Choices and the Fiscal Channel of Monetary Policy
Autor/es:
Kossacoff, Ramiro V.
Tutor/es:
Macera, Manuel
Carrera de la tesis:
Maestría en Economía
Fecha:
2023Resumen
The main objective of this paper is to analyze the impact of countercyclical fiscal rules on
monetary policy transmission channels. Using a model with portfolio heterogeneity and
aggregate uncertainty as a basis, it is shown that unexpected shocks on nominal interest
rate induce effects on the composition of income across the wealth distribution. In this
context, a fiscal policy rule aimed at reducing the procyclicality of government spending
in recessionary contexts through debt issuance (i.e., a countercyclical fiscal rule) helps to
mitigate these distributional effects. This result is associated with the fact that the increase
in the supply of bonds generates changes in their expected return –impacting households’
consumption and portfolio decisions–, which alters the transmission of monetary shocks on
income. On the other hand, the conclusions presented in this paper lay the foundations for
future analyses aimed at studying the trade–off between monetary policy stabilization and
its distributional consequences.