Abstract

This dissertation is comprised of two essays in macroeconomics. In the first chapter, I theoretically investigate the macroeconomic impact of quantitative easing (tightening) policy on the business cycle. To this end, I build a heterogeneous-agent New Keynesian (HANK) model in which the short-term asset and the long-term asset are imperfect substitutes. In contrast to existing studies, my simulation supposes the QE shock is more persistent in the sense that the central bank announces the future asset purchase strategy in advance. I find that if such an announcement is considered, the power of QE is weaker in the HANK model than in the representative-agent model. Furthermore, excessive extension of QE can have a contractionary effect on the economy. Precautionary saving due to idiosyncratic income risk and redistribution resulting from low long-term yield play a key role in these results. The latter chapter, which is coauthored with Tomiyuki Kitamura, empirically studies the formation of inflation expectations in the firm sector. We construct a small-scale macroeconomic model that incorporates three hypotheses on the formation of inflation expectations: the full information rational expectations (FIRE), inattention, and sticky information hypotheses. Using data for Japan, including survey data on firms' inflation expectations, We estimate the model to examine the empirical validity of each hypothesis, and analyze how incomplete information affects the dynamics of firms' inflation expectations. Our main findings are twofold. First, each one of the three hypotheses has a role to play in explaining the mechanism of the formation of firms' inflation expectations in Japan. Second, although firms' inflation expectations have been pushed up by the Bank of Japan's introduction of its `"price stability target" and the expansion in the output gap amid the Bank's Quantitative and Qualitative Monetary Easing (QQE), incomplete information slowed the pace of the rise in firms' inflation expectations.

Committee Chair

Yongseok Shin

Committee Members

Gaetano Antinolfi; Juan Sanchez; Marcus Berliant; Ping Wang

Degree

Doctor of Philosophy (PhD)

Author's Department

Economics

Author's School

Graduate School of Arts and Sciences

Document Type

Dissertation

Date of Award

8-13-2025

Language

English (en)

Author's ORCID

https://orcid.org/0000-0001-5743-6022

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Available for download on Thursday, August 12, 2027

Included in

Economics Commons

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