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Hyperbolic Discounting and Positive Optimal Inflation

Graham, Liam; Snower, Dennis - CESifo - 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/10009024848

Speed Limit Policies: The Output Gap and Optimal Monetary Policy

Walsh, Carl - CESifo - 2001

In a standard New Keynesian model, a myopic central bank concerned with stabilizing inflation and changes in the output gap will implement a policy under discretion that replicates the optimal, timeless perspective, precommitment policy. By stabilizing output gap changes, the central bank...

Persistent link: https://www.econbiz.de/10005406008

Inflation Targeting by Debtor Central Banks in Emerging Market Economies

Löffler, Axel; Schnabl, Gunther; Schobert, Franziska - CESifo - 2010

to accumulate massive foreign reserves. If left unsterilized, the liquidity expansion can threaten domestic macroeconomic … stability. To contain domestic inflation these central banks absorb rather then provide liquidity in their regular monetary … surplus liquidity is less efficient, because absorbing liquidity raises the costs of monetary policy operations. By …

Persistent link: https://www.econbiz.de/10008511598

Multiple Objectives and Central Bank Tradeoffs under Flexible Inflation Targeting

Walsh, Carl - CESifo - 2014

Many inflation targeting central banks are facing calls to expand their list of policy goals. I discuss how recent research provides new insights into the goals of policy and the tradeoffs presented by multiple goals. I focus particular attention on the role of unemployment and labor market...

Persistent link: https://www.econbiz.de/10011086458

Pattern Bargaining and Wage Leadership in a Small Open Economy

Calmfors, Lars; Larsson, Anna - CESifo - 2011

Pattern bargaining with the tradables (manufacturing) sector as wage leader is a common form of wage bargaining in Europe. We question the conventional wisdom that such bargaining produces wage restraint. In our model all forms of pattern bargaining give the same outcomes as uncoordinated...

Persistent link: https://www.econbiz.de/10009150654

A New Two-Pillar Strategy for the ECB

Grauwe, Paul De; Gros, Daniel - CESifo - 2009

The ECB has been arguing in the past that since there is no trade-off between price stability and financial stability, the pursuit of price stability is the best a central bank can do to also maintain financial stability. We argue that there is a potential trade-off between price stability and...

Persistent link: https://www.econbiz.de/10008596592

Volatility of Exchange Rates in Selected New EU Members: Evidence from Daily Data

Fidrmuc, Jarko; Horváth, Roman - CESifo - 2007

We examine the daily exchange rate dynamics in selected new EU member states (Czech Republic, Hungary, Poland, Romania, and Slovakia) using GARCH and TARCH models between 1999 and 2006. Despite these countries adopted inflation targeting regime, they occasionally tried to manage their exchange...

Persistent link: https://www.econbiz.de/10005765724