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Hyperbolic Discounting and Positive Optimal Inflation

Graham, Liam; Snower, Dennis J. - C.E.P.R. Discussion Papers - 2011

The Friedman rule states that steady-state welfare is maximized when there is deflation at the real rate of interest. Recent work by Khan et al. (2003) uses a richer model but still finds deflation optimal. In an otherwise standard new Keynesian model we show that, if households have hyperbolic...

Persistent link: https://www.econbiz.de/10009643503

The Euro as an International Currency: Explaining Puzzling First Evidence

Hau, Harald; Killeen, William; Moore, Michael J - C.E.P.R. Discussion Papers - 2000

almost two-thirds while the volume has almost halved. We propose a microstructure theory for a system of multiple exchange …

Persistent link: https://www.econbiz.de/10005067509

Micro, Macro, and Strategic Forces in International Trade Invoicing

Goldberg, Linda S.; Tille, Cédric - C.E.P.R. Discussion Papers - 2009

The use of different currencies in the invoicing of international trade transactions plays a major role in the international transmission of economic fluctuations. Existing studies argue that an exporter’s invoicing choice reflects structural aspects of her industry, such as market share and...

Persistent link: https://www.econbiz.de/10008496452

The Emergence of the Euro as an International Currency

Alogoskoufis, George; Portes, Richard; Rey, Hélène - C.E.P.R. Discussion Papers - 1997

*The European Union will enter Stage Three of Economic and Monetary Union (EMU) in 1999. The development of euro financial markets and thickness externalities in the use of the euro as means of payment will be the major factors determining the importance of the euro as an international currency....

Persistent link: https://www.econbiz.de/10005662175

Should We be Afraid of Friedman's Rule?

Uhlig, Harald - C.E.P.R. Discussion Papers - 2000

Should one think of zero nominal interest rates as an undesirable liquidity trap or as the desirable Friedman rule? I use three different frameworks to discuss this issue. First, I restate Cole and Kocherlakota's (1998) analysis of Friedman's rule: short run increases in the money stock -...

Persistent link: https://www.econbiz.de/10005788876

Optimal Monetary Policy in an Operational Medium-Sized DSGE Model

Adolfson, Malin; Laséen, Stefan; Lindé, Jesper; … - C.E.P.R. Discussion Papers - 2008

We show how to construct optimal policy projections in Ramses, the Riksbank's open-economy medium-sized DSGE model for forecasting and policy analysis. Bayesian estimation of the parameters of the model indicates that they are relatively invariant to alternative policy assumptions and supports...

Persistent link: https://www.econbiz.de/10005789078

Optimal Commitment Policy Under Noisy Information

Aoki, Kosuke - C.E.P.R. Discussion Papers - 2002

This Paper studies an advantage of commitment over discretion when a central bank observes only noisy measures of current inflation and output, in the context of an optimizing model with nominal-price stickiness. Under a commitment regime, if current policy turns out to be too expansionary...

Persistent link: https://www.econbiz.de/10005789179

A Modern Reconsideration of the Theory of Optimal Currency Areas

Corsetti, Giancarlo - C.E.P.R. Discussion Papers - 2008

What can be learnt from revisiting the Optimal Currency Areas (OCA) theory 50 years from its birth, in light of recent … advances in open economy macro and monetary theory? This paper presents a stylized micro-founded model of the costs of adopting … exchange rates do not perform the stabilizing role envisioned by traditional OCA theory, a common monetary policy can be as …

Persistent link: https://www.econbiz.de/10005791521

Optimal Monetary Policy in a Small Open Economy with Home Bias

Faia, Ester; Monacelli, Tommaso - C.E.P.R. Discussion Papers - 2006

We analyze optimal monetary policy in a small open economy characterized by home bias in consumption. Peculiar to our framework is the application of a Ramsey-type analysis to a model of the recent open economy New Keynesian literature. We show that home bias in consumption is a sufficient...

Persistent link: https://www.econbiz.de/10005791812

Parameter Instability, Model Uncertainty and the Choice of Monetary Policy

Favero, Carlo A.; Milani, Fabio - C.E.P.R. Discussion Papers - 2005

This paper starts from the observation that parameter instability and model uncertainty are relevant problems for the analysis of monetary policy in small macroeconomic models. We propose to deal with these two problems by implementing a novel ‘thick recursive modelling’ approach. At each...

Persistent link: https://www.econbiz.de/10005498117