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We analytically characterize optimal monetary policy for an augmented New Keynesian model with a housing sector. In a setting where the private sector has rational expectations about future housing prices and inflation, optimal monetary policy can be characterized without making reference to...
Persistent link: https://www.econbiz.de/10011918620
Persistent link: https://www.econbiz.de/10003448470
This paper considers the desirability of the observed tendency of central banks to adjust interest rates only gradually in response to changes in economic conditions. It shows, in the context of a simple model of optimizing private-sector behavior, that such inertial behavior on the part of the...
Persistent link: https://www.econbiz.de/10009768269
Persistent link: https://www.econbiz.de/10001362623