Publications

6 publications found, searching for 'Alfonso Palacio-Vera '

• Working Paper No. 786 January 21, 2014

  The Rational Expectations Hypothesis

  Alfonso Palacio-Vera, and Iván H. Ayala
  Abstract

  The rational expectations hypothesis (REH) is the standard approach to expectations formation in macroeconomics. We discuss its compatibility with two strands of Karl Popper´s philosophy: his theory of knowledge and learning, and his “rationality principle” (RP). First, we show that the REH is utterly incompatible with the former. Second, we argue that the REH can […]

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• Working Paper No. 685 September 07, 2011

  Quantitative Easing, Functional Finance, and the “Neutral” Interest Rate

  Alfonso Palacio-Vera
  Abstract

  The main purpose of this study is to explore the potential expansionary effect stemming from the monetization of debt. We develop a simple macroeconomic model with Keynesian features and four sectors: creditor households, debtor households, businesses, and the public sector. We show that such expansionary effect stems mainly from a reduction in the financial cost […]

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• Working Paper No. 664 March 31, 2011

  Can Portugal Escape Stagnation without Opting Out from the Eurozone?

  Alfonso Palacio-Vera, and Pedro Leao
  Abstract

  The creation of the Economic and Monetary Union (EMU) has not brought significant gains to the Portuguese economy in terms of real convergence with wealthier eurozone countries. We analyze the causes of the underperformance of the Portuguese economy in the last decade, discuss its growth prospects within the EMU, and make two proposals for urgent […]

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• Working Paper No. 478 November 03, 2006

  On Lower-bound Traps

  Alfonso Palacio-Vera
  Abstract

  We present a simple theoretical framework that integrates the notion of the natural or neutral interest rate, liquidity preference theory, and the monetary policy practice by modern central banks. We claim that this theory explains the conditions under which an economy will experience an aggregate demand deficiency problem within a modern institutional setting. Contrary to […]

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• Working Paper No. 475 August 22, 2006

  Capital Stock and Unemployment

  Alfonso Palacio-Vera, Ana Rosa Martinez-Canete, Elena Marquez de la Cruz, and Ines Perez-Soba Aguilar
  Abstract

  This paper examines the proposition that capital stock relative to aggregate output has been an important variable in the determination of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) over the last four decades. The authors present new empirical evidence that lends strong support to the claim that the aggregate capital-output ratio, the real price of […]

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• Working Paper No. 430 November 22, 2005

  Are Long-run Price Stability and Short-run Output Stabilization All That Monetary Policy Can Aim For?

  Giuseppe Fontana, and Alfonso Palacio-Vera
  Abstract

  A central tenet of the so-called "new consensus" view in macroeconomics is that there is no long-run trade-off between inflation and unemployment. The main policy implication of this principle is that all monetary policy can aim for is (modest) short-run output stabilization and long-run price stability—i.e., monetary policy is neutral with respect to output and […]

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