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inequality and raises unemployment, but expected welfare gains are ensured if workers are risk neutral. And while wage inequality …
Persistent link: https://www.econbiz.de/10003868538
This paper specifies a new convenient algorithm to construct policy projections conditional on alternative anticipated policy-rate paths in linearized dynamic stochastic general equilibrium (DSGE) models, such as Ramses, the Riksbank's main DSGE model. Such projections with anticipated...
Persistent link: https://www.econbiz.de/10008696833
Policymakers often use the output gap, a noisy signal of economic activity, as a guide for setting monetary policy. Noise in the data argues for policy caution. At the same time, the zero bound on nominal interest rates constrains the central bank's ability to stimulate the economy during...
Persistent link: https://www.econbiz.de/10009532249
Many argue that, in the presence of a lower bound on nominal interest rates, central banks should use a risk management approach for setting policy, which implies commit- ting to a more expansionary policy to deal with uncertainty about the economic recovery. Using a standard model for monetary...
Persistent link: https://www.econbiz.de/10011287540
I compare nominal GDP level targeting to flexible inflation targeting in a small New Keynesian model subject to the zero lower bound on nominal policy rates. First, I study the performance of optimal discretionary policies. I find that, for a standard calibration, inflation targeting under...
Persistent link: https://www.econbiz.de/10009761531
We reconsider the role of an inflation conservative central banker in a setting with distortionary taxation. To do so, we assume monetary and fiscal policy are decided by independent authorities that do not abide to past commitments. If the two authorities make policy decisions simultaneously,...
Persistent link: https://www.econbiz.de/10010202952
Persistent link: https://www.econbiz.de/10011438949
Persistent link: https://www.econbiz.de/10008747128
evaluated using a model-consistent measure of welfare, fiscal rules calibrated to the U.S. response during both the Great …
Persistent link: https://www.econbiz.de/10013161539
I study the welfare performance of a policy regime of fiscal activism in which fiscal policy acts as an automatic …
Persistent link: https://www.econbiz.de/10013161545