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Optimal Monetary Policy under Uncertainty in DSGE Models : A Markov Jump-Linear-Quadratic Approach

Svensson, Lars E.O. - 2008

We study the design of optimal monetary policy under uncertainty in a dynamic stochastic general equilibrium models. We … use a Markov jump-linear-quadratic (MJLQ) approach to study policy design, approximating the uncertainty by different … a benchmark New Keynesian model, analyzing how policy is affected by uncertainty, and how learning and active …

Persistent link: https://www.econbiz.de/10012464755

Leaning Against the Wind : The Role of Different Assumptions About the Costs

Svensson, Lars E.O. - 2017

"Leaning against the wind" (LAW), that is, tighter monetary policy for financial-stability purposes, has costs in terms of a weaker economy with higher unemployment and lower inflation and possible benefits from a lower probability or magnitude of a (financial) crisis. A first obvious cost is a...

Persistent link: https://www.econbiz.de/10012453966

Cost-Benefit Analysis of Leaning Against the Wind

Svensson, Lars E.O. - 2016

A simple and transparent framework for cost-benefit analysis of \leaning against the wind" (LAW), that is, tighter monetary policy for financial-stability purposes, is presented. LAW has obvious costs in the form of a weaker economy if no crisis occurs and possible benefits in the form of a...

Persistent link: https://www.econbiz.de/10012456770

Inflation Targeting

Svensson, Lars E.O. - 2010

Inflation targeting is a monetary-policy strategy that is characterized by an announced numerical inflation target, an implementation of monetary policy that gives a major role to an inflation forecast and has been called forecast targeting, and a high degree of transparency and accountability....

Persistent link: https://www.econbiz.de/10012462017

Anticipated Alternative Instrument-Rate Paths in Policy Simulations

Laséen, Stefan - 2009

This paper specifies a new convenient algorithm to construct policy projections conditional on alternative anticipated policy-rate paths in linearized dynamic stochastic general equilibrium (DSGE) models, such as Ramses, the Riksbank's main DSGE model. Such projections with anticipated...

Persistent link: https://www.econbiz.de/10012463746

Current Account Dynamics and Monetary Policy

Ferrero, Andrea - 2008

We explore the implications of current account adjustment for monetary policy within a simple two-country DSGE model. Our framework nests Obstfeld and Rogoff's (2005) static model of exchange rate responsiveness to current account reversals. It extends this approach by endogenizing the dynamic...

Persistent link: https://www.econbiz.de/10012464741

Inflation Targeting as a Monetary Policy Rule

Svensson, Lars E.O. - 1998

The purpose of the paper is to survey and discuss inflation targeting in the context of monetary policy rules. The paper provides a general conceptual discussion of monetary policy rules, attempts to clarify the essential characteristics of inflation targeting, compares inflation targeting to...

Persistent link: https://www.econbiz.de/10012472023

Optimal Inflation Targets, `Conservative' Central Banks, and Linear Inflation Contracts

Svensson, Lars E.O. - 1995

Inflation target regimes (like those of New Zealand, Canada, U.K., Sweden and Finland) are interpreted as having explicit inflation targets and implicit output/unemployment targets. Without output-unemployment persistence delegation of monetary policy to a discretionary instrument-independent...

Persistent link: https://www.econbiz.de/10012473624

Monetary Policy with Flexible Exchange Rates and Forward Interest Rates as Indicators

Svensson, Lars E.O. - 1994

In the new situation with flexible exchange rates, monetary policy in Europe will have to rely more on indicators than previously under fixed rates. One of the potential indicators, the forward interest rate curve, can be used to indicate market expectations of the time-paths of future short...

Persistent link: https://www.econbiz.de/10012474301

Trade in Nominal Assets : Monetary Policy, and Price Level and Exchange Rate Risk

Svensson, Lars E.O. - 1987

In a previous paper, "Trade in Risky Assets," I have analyzed the pattern of international trade in risky real assets between barter economies, relying on the Law of Comparative Advantage and using autarky asset price differences to predict the pattern of asset trade. In this paper the analysis...

Persistent link: https://www.econbiz.de/10012476651