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Optimal Interest-Rate Rules in a Forward-Looking Model, and Inflation Stabilization versus Price-Level Stabilization

Giannoni, Marc P. - 2010

This paper characterizes the properties of various interest-rate rules in a basic forward-looking model. We compare simple Taylor rules and rules that respond to price-level fluctuations (called Wicksellian rules). We argue that by introducing an appropriate amount of history dependence in...

Persistent link: https://www.econbiz.de/10012462667

Forecast Targeting as a Monetary Policy Strategy : Policy Rules in Practice

Woodford, Michael - 2007

Forecast targeting is an innovation in central banking that represents an important step toward more rule-based policymaking, even if it is not an attempt to follow a policy rule of any of the types that have received primary attention in the theoretical literature on optimal monetary policy....

Persistent link: https://www.econbiz.de/10012464930

Endogenous Monetary Policy Regime Change

Davig, Troy - 2006

This paper makes changes in monetary policy rules (or regimes) endogenous. Changes are triggered when certain endogenous variables cross specified thresholds. Rational expectations equilibria are examined in three models of threshold switching to illustrate that (i) expectations formation...

Persistent link: https://www.econbiz.de/10012466260

Backward-Looking Interest-Rate Rules, Interest-Rate Smoothing, and Macroeconomic Instability

Behabib, Jess - 2003

The existing literature on the stabilizing properties of interest-rate feedback rules has stressed the perils of linking interest rates to forecasts of future inflation. Such rules have been found to give rise to aggregate fluctuations due to self-fulfilling expectations. In response to this...

Persistent link: https://www.econbiz.de/10012469142

Optimal Interest-Rate Rules : I. General Theory

Giannoni, Marc P. - 2003

This paper proposes a general method for deriving an optimal monetary policy rule in the case of a dynamic linear rational-expectations model and a quadratic objective function for policy. A commitment to a rule of the type proposed results in a determinate equilibrium in which the responses to...

Persistent link: https://www.econbiz.de/10012469284

The Empirics of Monetary Policy Rules in Open Economies

Clarida, Richard - 2001

This paper was prepared as a Keynote Address for the ESRC Conference on the Future of Macroeconomics held at the Bank of England Conference Center on April 14, 2000. It uses the empirical framework for formulating and estimating forward looking monetary policy rules developed in Clarida, Gali,...

Persistent link: https://www.econbiz.de/10012470113

Policy Rules for Open Economies

Ball, Laurence - 1998

This paper examines the choice of a monetary-policy rule in a simple macroeconomic model. In a closed economy, the optimal policy is a output and inflation. In an open economy, the optimal rule changes in two ways. First, the policy instrument is a Conditions Index the exchange rate. Second, on...

Persistent link: https://www.econbiz.de/10012472053

Interest-Rate Rules in an Estimated Sticky Price Model

Rotemberg, Julio J. - 1998

This paper evaluates alternative rules by which the Fed may set interest rates using the small model of the U.S. economy estimated in Rotemberg and Woodford (1997). Our main substantive finding is that low and stable inflation together with stable interest rates can be achieved by letting the...

Persistent link: https://www.econbiz.de/10012472193

Monetary Policy Rules and Financial Stability

McCallum, Bennett T. - 1994

This paper investigates empirically the possibility that a central bank could adhere to a macro-oriented monetary policy rule while also providing lender-of-last-resort services to the financial system. The method considered involves smoothing week-to-week movements of an interest rate...

Persistent link: https://www.econbiz.de/10012474236

Monetary-Based Asset Pricing : A Mixed-Frequency Structural Approach

Bianchi, Francesco; Ludvigson, Sydney C.; Ma, Sai - National Bureau of Economic Research - 2022

We integrate a high-frequency monetary event study into a mixed-frequency macro-finance model and structural estimation …. The model and estimation allow for jumps at Fed announcements in investor beliefs, providing granular detail on why … financial market risk. However, the structural estimation also finds that much of the causal impact of monetary policy on …

Persistent link: https://www.econbiz.de/10013210100

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