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This paper presents a theory of the monetary transmission mechanism in a monetary version of Farmer’s (2009) model in which there are multiple equilibrium unemployment rates. The model has two equations in common with the new-Keynesian model; the optimizing IS curve and the policy rule. It...
Persistent link: https://www.econbiz.de/10008692320
how central bank preferences (and thereby monetary policy) affect the relation between nominal interest rates, inflation … estimated by maximum likelihood on quarterly US data. The policy experiments include stronger inflation targeting, more active …
Persistent link: https://www.econbiz.de/10005497757
Survey data on household expectations of inflation are routinely used in economic analysis, yet it is not clear to what … recovering households' implicit expectations of inflation from their consumption expenditures. We show that these implicit … expectations have predictive power for CPI inflation. They are better predictors of CPI inflation than survey responses, except for …
Persistent link: https://www.econbiz.de/10005067515
Forward interest rates have become popular indicators of inflation expectations. The usefulness of this indicator … depends on the relative volatility and the correlation of inflation expectations and expected real interest rates. This paper … expected real interest rate add to the inflation expectations is balanced by a tendency for expected real interest rates and …
Persistent link: https://www.econbiz.de/10005067661
markets, and central bank conservativeness. Economic performance is characterized by unemployment, inflation, real wages and …
Persistent link: https://www.econbiz.de/10005504756
perfect competition on product markets and that inflation is chosen directly by the monetary authority. Although these …, prices are set by firms and that the monetary authority affects the price level and inflation by determining the money supply … firms and that the monetary authority affects the price level and inflation indirectly through its choice of money supply …
Persistent link: https://www.econbiz.de/10005124489
firms) and a measure of wage entitlement are critical to fit the dynamic responses of hours, wages and inflation to various … significant fall of inflation and nominal wage growth in response to a neutral technology shock. …
Persistent link: https://www.econbiz.de/10005136735
We reformulate the Smets-Wouters (2007) framework by embedding the theory of unemployment proposed in Galí (2011a,b). We estimate the resulting model using postwar U.S. data, while treating the unemployment rate as an additional observable variable. Our approach overcomes the lack of...
Persistent link: https://www.econbiz.de/10009024487
heterogeneity in wage rigidity, such as the persistence in price and the wage inflation, which a standard New Keynesian model with …
Persistent link: https://www.econbiz.de/10011249376
Central banks throughout the world predict inflation with new-Keynesian models where, after a shock, the unemployment …
Persistent link: https://www.econbiz.de/10011084150