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The Possible Unemployment Cost of Average Inflation below a Credible Target
Svensson, Lars E.O. - National Bureau of Economic Research (NBER) - 2013
target, the long-run Phillips curve becomes non-vertical. During 1997-2011, average inflation expectations in Sweden have … unemployment rate has been about 0.8 percentage points higher than if average inflation had been on target. This is a large … unemployment cost of undershooting the inflation target. …
Persistent link: https://www.econbiz.de/10011234893
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Central Bank Communication and Expectations Stabilization
Eusepi, Stefano; Preston, Bruce - National Bureau of Economic Research (NBER) - 2007
This paper analyzes the value of communication in the implementation of monetary policy. The central bank is uncertain about the current state of the economy. Households and firms are uncertain about the statistical properties of aggregate variables, including nominal interest rates, and must...
Persistent link: https://www.econbiz.de/10005088899
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The Making Of A Great Contraction With A Liquidity Trap and A Jobless Recovery
Schmitt-Grohé, Stephanie Schmitt-Grohe; Uribe, Martín - National Bureau of Economic Research (NBER) - 2012
recovered but unemployment lingered). This paper presents a model that captures these three facts. The key elements of the model …
Persistent link: https://www.econbiz.de/10010969402
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Labor Market Slack and Monetary Policy
Levin, Andrew Theo; Blanchflower, David G. - National Bureau of Economic Research (NBER) - 2015
conventional measure of the unemployment rate (that is, the number of individuals who are not working at all and actively searching … working part time who want a full-time job) and the extent of hidden unemployment (that is, people who are not actively ….S. labor market slack and show that underemployment and hidden unemployment currently account for the bulk of the U …
Persistent link: https://www.econbiz.de/10011262922
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Optimal Taylor Rules in New Keynesian Models
House, Christopher; Boehm, Christoph E. - National Bureau of Economic Research (NBER) - 2014
We analyze the optimal Taylor rule in a standard New Keynesian model. If the central bank can observe the output gap and the inflation rate without error, then it is typically optimal to respond infinitely strongly to observed deviations from the central bank's targets. If it observes inflation...
Persistent link: https://www.econbiz.de/10010951201
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The Macroeconomic Effects of Interest on Reserves
Ireland, Peter - National Bureau of Economic Research (NBER) - 2012
This paper uses a New Keynesian model with banks and deposits to study the macroeconomic effects of policies that pay interest on reserves. While their effects on output and inflation are small, these policies require major adjustments in the way that the monetary authority manages the supply of...
Persistent link: https://www.econbiz.de/10011262796
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Inflation targeting and private sector forecasts
Cecchetti, Stephen; Hakkio, Craig S. - National Bureau of Economic Research (NBER) - 2009
Transparency is one of the biggest innovations in central bank policy of the past quarter century. Modern central bankers believe that they should be as clear about their objectives and actions as possible. However, is greater transparency always beneficial? Recent work suggests that when...
Persistent link: https://www.econbiz.de/10008631102
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Optimal Interest-Rate Rules in a Forward-Looking Model, and Inflation Stabilization versus Price-Level Stabilization
Giannoni, Marc P. - National Bureau of Economic Research (NBER) - 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/10008635937
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Stability First: Reflections Inspired by Otmar Issing's Success as the ECB's Chief Economist
Kashyap, Anil; Gaspar, Vitor - National Bureau of Economic Research (NBER) - 2006
In this paper, we review Otmar Issing's career as the ECB's inaugural chief economist and we document many notable successes. We try to infer some general principles that contributed to these successes and draw some lessons. In doing so, we review the evidence using Woodford%u2019s (2003) recent...
Persistent link: https://www.econbiz.de/10005710386
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Determinacy and Identification with Taylor Rules
Cochrane, John H. - National Bureau of Economic Research (NBER) - 2007
The new-Keynesian, Taylor-rule theory of inflation determination relies on explosive dynamics. By raising interest rates in response to inflation, the Fed induces ever-larger inflation or deflation, unless inflation jumps to one particular value on each date. However, economics does not rule out...
Persistent link: https://www.econbiz.de/10005710505