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Selecting an intermediate target variable for monetary policy when the goal is price stability

Belongia, Michael T. - Federal Reserve Bank of St. Louis - 1992

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

The identification of the response of interest rates to monetary policy actions using market-based measures of monetary policy shocks

Thornton, Daniel L. - Federal Reserve Bank of St. Louis - 2009

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

Sticky-price models and the natural rate hypothesis

Andres, Javier; López-Salido, J. David; Nelson, Edward - Federal Reserve Bank of St. Louis - 2005

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

Optimal monetary policy, endogenous sticky prices and multiplicity of equilibria

Barseghyan, Levon; DiCecio, Riccardo - Federal Reserve Bank of St. Louis - 2007

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

The monetary instrument matters

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

. 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

The low-frequency impact of daily monetary policy shocks

Francis, Neville; Ghysels, Eric; Owyang, Michael T. - Federal Reserve Bank of St. Louis - 2011

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

The P-star model and Austrian prices

Tatom, John A. - Federal Reserve Bank of St. Louis - 1992

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

Foreign exchange volatility is priced in equities

Guo, Hui; Neely, Christopher J.; Higbee, Jason - Federal Reserve Bank of St. Louis - 2006

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

Incomplete information and self-fulfilling prophecies

Wang, Pengfei; Wen, Yi - Federal Reserve Bank of St. Louis - 2007

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

Another look at sticky prices and output persistence

Wang, Peng-fei; Wen, Yi - Federal Reserve Bank of St. Louis - 2005

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