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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

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

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

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

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

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

Monetary and Fiscal Policy in a Liquidity Trap: The Japanese Experience 1999-2004

Iwamara, Mitsuru; Kudo, Takeshi; Watanabe, Tsutomu - National Bureau of Economic Research (NBER) - 2005

We characterize monetary and fiscal policy rules to implement optimal responses to a substantial decline in the natural rate of interest, and compare them with policy decisions made by the Japanese central bank and government in 1999-2004. First, we find that the Bank of Japan's policy...

Persistent link: https://www.econbiz.de/10005033484

Negative Nominal Interest Rates: Three ways to overcome the zero lower bound

Buiter, Willem Hendrik - National Bureau of Economic Research (NBER) - 2009

The paper considers three methods for eliminating the zero lower bound on nominal interest rates and thus for restoring symmetry to domain over which the central bank can vary its policy rate. They are: (1) abolishing currency (which would also be a useful crime-fighting measure); (2) paying...

Persistent link: https://www.econbiz.de/10005036814

Endogenous Monetary Policy Regime Change

Davig, Troy; Leeper, Eric - National Bureau of Economic Research (NBER) - 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/10005089295

Opting Out of the Great Inflation: German Monetary Policy After the Break Down of Bretton Woods

Beyer, Andreas; Gaspar, Vitor; Gerberding, Christina; … - National Bureau of Economic Research (NBER) - 2008

During the turbulent 1970s and 1980s the Bundesbank established an outstanding reputation in the world of central banking. Germany achieved a high degree of domestic stability and provided safe haven for investors in times of turmoil in the international financial system. Eventually the...

Persistent link: https://www.econbiz.de/10005580496