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Determinacy in New Keynesian Models: a role for money after all?
Minford, Patrick; Srinivasan, Naveen - C.E.P.R. Discussion Papers - 2010
The New-Keynesian Taylor-Rule model of inflation determination with no role for money is incomplete. As Cochrane (2007a, b) argues, it has no credible mechanism for ruling out bubbles (or deal with the non-uniqueness problem that arises when the Taylor principle is violated) and as a result...
Persistent link: https://www.econbiz.de/10008466336
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Expectations, Learning and Monetary Policy: An Overview of Recent Rersearch
Evans, George W.; Honkapohja, Seppo - C.E.P.R. Discussion Papers - 2008
Expectations about the future are central for determination of current macroeconomic outcomes and the formulation of monetary policy. Recent literature has explored ways for supplementing the benchmark of rational expectations with explicit models of expectations formation that rely on...
Persistent link: https://www.econbiz.de/10005666454
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Adaptive Learning and Monetary Policy Design
Evans, George W.; Honkapohja, Seppo - C.E.P.R. Discussion Papers - 2003
We review the recent work on interest rate setting, which emphasizes the desirability of designing policy to ensure stability under learning. Appropriately designed expectations-based rules can yield optimal rational expectations equilibria that are both determinate and stable under learning....
Persistent link: https://www.econbiz.de/10005791392
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Freidman's Money Supply Rule versus Optimal Interest Rate Policy
Evans, George W.; Honkapohja, Seppo - C.E.P.R. Discussion Papers - 2003
respect to determinacy, stability under learning and optimality. First we review the recent literature: open-loop interest … determinacy and stability under learning, and implements optimal policy. We show that Friedman’s rule also can generate equilibria …
Persistent link: https://www.econbiz.de/10005067474
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Robust Learning Stability with Operational Monetary Policy Rules
Evans, George W.; Honkapohja, Seppo - C.E.P.R. Discussion Papers - 2008
We consider "robust stability" of a rational expectations equilibrium, which we define as stability under discounted (constant gain) least-squares learning, for a range of gain parameters. We find that for operational forms of policy rules, i.e. rules that do not depend on contemporaneous values...
Persistent link: https://www.econbiz.de/10005498187
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Methods for Measuring Expectations and Uncertainty in Markov-Switching Models
Bianchi, Francesco - C.E.P.R. Discussion Papers - 2013
I develop a toolbox to analyze the properties of multivariate Markov-switching models. I first derive analytical formulas for the evolution of first and second moments, taking into account the possibility of regime changes. The formulas are then used to characterize the evolution of expectations...
Persistent link: https://www.econbiz.de/10011083330
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Monetary/Fiscal Policy Mix and Agents' Beliefs
Bianchi, Francesco; Ilut, Cosmin - C.E.P.R. Discussion Papers - 2013
We reinterpret post World War II US economic history using an estimated microfounded model that allows for changes in the monetary/fiscal policy mix. We find that the fiscal authority was the leading authority in the '60s and the '70s. The appointment of Volcker marked a change in the conduct of...
Persistent link: https://www.econbiz.de/10011084218
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Comparing Inflation and Price Level Targeting: the Role of Forward Guidance and Transparency
Honkapohja, Seppo; Mitra, Kaushik - C.E.P.R. Discussion Papers - 2015
We examine global dynamics under learning in New Keynesian models with price level targeting that is subject to the zero lower bound. The role of forward guidance is analyzed under transparency about the policy rule. Properties of transparent and non-transparent regimes are compared to each...
Persistent link: https://www.econbiz.de/10011213315
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Heterogeneity in Wage Setting Behavior in a New-Keynesian Model
Eijffinger, Sylvester C W; Grajales, Anderson; Uras, … - C.E.P.R. Discussion Papers - 2015
In this paper we estimate a New-Keynesian DSGE model with heterogeneity in price and wage setting behavior. In a recent … study, Coibion and Gorodnichenko (2011) develop a DSGE model, in which firms follow four different types of price setting …) framework by incorporating heterogeneity in nominal wage setting behavior among households. We solve this DSGE model and …
Persistent link: https://www.econbiz.de/10011249376
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Bubbles and Central Banks: Historical Perspectives
Brunnermeier, Markus K; Schnabel, Isabel - C.E.P.R. Discussion Papers - 2015
This paper reviews some of the most prominent asset price bubbles from the past 400 years and documents how central banks (or other institutions) reacted to those bubbles. The historical evidence suggests that the emergence of bubbles is often preceded or accompanied by an expansionary monetary...
Persistent link: https://www.econbiz.de/10011249380