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Conventional investigations of the "best" intermediate target variable for monetary policy have used a single criterion: the best fit between the behavior of an aggregate and that of some goal variable such as nominal spending or the aggregate price level. Ignored in this type of study, however,...
Persistent link: https://www.econbiz.de/10005490886
It is common practice to estimate the response of asset prices to monetary policy actions using market-based measures …
Persistent link: https://www.econbiz.de/10005077869
A major criticism of standard specifications of price adjustment in models for monetary policy analysis is that they violate the natural rate hypothesis by allowing output to differ from potential in steady state. In this paper we estimate a dynamic optimizing business cycle model whose...
Persistent link: https://www.econbiz.de/10005707655
We analyze optimal discretionary monetary policy in an endogenous sticky prices model. Similar models with exogenous … sticky prices can deliver multiple equilibria. This is a necessary condition for the occurrence of expectation traps (when …-inflation equilibrium. With endogenous sticky prices, the monetary authority does not validate high-inflation expectations and deviates to …
Persistent link: https://www.econbiz.de/10005707710
. Those counterfactual implications are eliminated by the use of interest rate rules whether prices are sticky or not. A …
Persistent link: https://www.econbiz.de/10005352925
With rare exception, studies of monetary policy tend to neglect the timing of the innovations to the monetary policy instrument. Models which do take timing seriously are often difficult to compare to standard VAR models of monetary policy because of the differences in the frequency that they...
Persistent link: https://www.econbiz.de/10008872024
to Germany, the article also investigates whether Austrian prices are tied to a German P-star measure. This hypothesis is …
Persistent link: https://www.econbiz.de/10005490892
This paper finds that standard asset pricing models fail to explain the significantly positive delta hedging errors from writing options on foreign exchange futures. Foreign exchange volatility does influence stock returns, however. The volatility of the JPY/USD exchange rate predicts the time...
Persistent link: https://www.econbiz.de/10005490913
This paper shows that incomplete information can be a rich source of sunspots equilibria. This is demonstrated in a standard dynamic general equilibrium model of monopolistic competition … la Dixit-Stiglitz. In the absence of fundamental shocks, the model has a unique certainty (fundamental)...
Persistent link: https://www.econbiz.de/10005490926
Keynesian literature has failed to show that sticky prices by themselves can effectively propagate business cycles in general …
Persistent link: https://www.econbiz.de/10005490961