utilization. In our analysis, we assume purely forward-looking nominal rigidities in nominal prices and wages a la Calvo(1983 …

/inflation variability trade-off. The model includes a forward-looking Taylor Rule to identify monetary policy and the impact of monetary …

Can active Taylor rules (i.e. monetary rules where the nominal interest rate responds more than proportionally to … into cycles and chaos, the higher the degree of openness of the economy is. Although the perils of Taylor rules are evident …

This paper evaluates monetary policy rules in a business cycle model with staggered prices and wage setting a la Calvo … and asymmetric information in the credit market. Rules are compared in a utility based welfare metric, the effects of the … more persistent. For the baseline calibration, the welfare costs of price stickiness are found to be less than 0.04 per …

Extant estimates of the welfare cost of business cycles suggest that this cost is quite low and might well be minuscule …-level consumption data, we show that the welfare cost of macroeconomic volatility is in fact very substantial. In many states, the … welfare gain from eliminating business cycles can exceed the gain from increasing the long-term growth rate by 1% forever. Our …

measure of the (lack of) credibility of the monetary policy authority, we investigate the welfare effect of a marginal … for only 6 quarters is enough to bridge 75% of the welfare gap between discretion and commitment. This seems to justify …