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Gavin, William T.; Keen, Benjamin D.; Pakko, Michael R. - Federal Reserve Bank of St. Louis - 2005

This paper revisits the issue of money growth versus the interest rate as the instrument of monetary policy. Using a … of inflation relative to money growth depends on whether the central bank follows a money growth rule or an interest rate … rule. With a money growth rule, inflation is not persistent and the price level is much more volatile than the money supply …

Persistent link: https://www.econbiz.de/10005352925

Inflation risk and optimal monetary policy

Gavin, William T.; Keen, Benjamin D.; Pakko, Michael R. - Federal Reserve Bank of St. Louis - 2007

This paper shows that the optimal monetary policies recommended by New Keynesian models still imply a large amount of inflation risk. We calculate the term structure of inflation uncertainty in New Keynesian models when the monetary authority adopts the optimal policy. When the monetary policy...

Persistent link: https://www.econbiz.de/10005490907

Monetary policy, the tax code, and the real effects of energy shocks

Gavin, William T.; Keen, Benjamin D.; Kydland, Finn E. - Federal Reserve Bank of St. Louis - 2013

behaves as a negative wealth effect and generates an immediate decline in output, investment, and hours worked. The large drop … in investment then causes a gradual but very persistent decline in the capital stock. That protracted decline in the …

Persistent link: https://www.econbiz.de/10010662819

Global dynamics at the zero lower bound

Gavin, William T.; Keen, Benjamin D.; Richter, Alexander; … - Federal Reserve Bank of St. Louis - 2013

capital, but we also study the model with capital, with and without investment adjustment costs. Our solution method …

Persistent link: https://www.econbiz.de/10010628491

The stimulative effect of forward guidance

Gavin, William T.; Keen, Benjamin D.; Richter, Alexander; … - Federal Reserve Bank of St. Louis - 2013

This paper examines the stimulative effect of central bank forward guidance—the promise to keep future policy rates lower than its policy rule suggests—when the short-term nominal interest rate is stuck at its zero lower bound (ZLB).We utilize a standard New Keynesian model in which forward...

Persistent link: https://www.econbiz.de/10011027342

U.S. monetary policy: a view from macro theory

Gavin, William T.; Keen, Benjamin D. - Federal Reserve Bank of St. Louis - 2012

We use a dynamic stochastic general equilibrium model to address two questions about U.S. monetary policy: 1) Can monetary policy elevate output when it is below potential? and 2) Is the zero lower bound a trap? The model answer to the first question is yes it can, but the effect is only...

Persistent link: https://www.econbiz.de/10010558512

The zero lower bound and the dual mandate

Gavin, William T.; Keen, Benjamin D. - Federal Reserve Bank of St. Louis - 2012

This article uses a DSGE framework to evaluate the role of monetary policy in determining the likelihood of encountering the zero lower bound. We find that the probability of experiencing episodes of being at zero lower bound depends almost exclusively on the monetary policy rule. A policy rule,...

Persistent link: https://www.econbiz.de/10010562442