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In this paper we use the Generalized Taylor Economy (GTE) framework in which there are many sectors with overlapping contracts of different lengths to analyze the design of monetary policy. We derive a utility based objective function of a central bank for this economy and use it to evaluate the...
Persistent link: https://www.econbiz.de/10013317481
The purpose of the paper is to design optimal monetary policy rules in a New-Keynesian model featuring the presence of non-atomistic unions. It is shown that concentrated labor markets call for more aggressive inflation stabilization. This is because the central bank is able to induce wage...
Persistent link: https://www.econbiz.de/10012779237
This paper studies optimal monetary policy rules in a framework with sticky prices, matching frictions and real wage rigidities. Optimal monetary policy is given by a constrained Ramsey plan in which the monetary authority maximizes the agents' welfare subject to the competitive economy...
Persistent link: https://www.econbiz.de/10013317347
central bank, or (ii) better anchoring, because they are missed less often, leading to an enhanced credibility. The evidence …
Persistent link: https://www.econbiz.de/10013225749
elements of the strategy can enhance the perceived credibility that price stability will be maintained in the medium … strongest positive impact on credibility, boosting credibility also among the less financially literate and generating more … persistent credibility gains, even after inflation increased …
Persistent link: https://www.econbiz.de/10014254531
We study alternative monetary policy strategies in the presence of the lower bound on nominal interest rates and a low equilibrium real rate using an estimated DSGE model for the euro area. We find that simple feedback rules that implement inflation targeting result in a binding lower bound...
Persistent link: https://www.econbiz.de/10014355956
The purpose of the paper is to design optimal monetary policy rules in a New-Keynesian model featuring the presence of non-atomistic unions. It is shown that concentrated labor markets call for more aggressive inflation stabilization. This is because the central bank is able to induce wage...
Persistent link: https://www.econbiz.de/10011604736
, information transmission through changes in the interest rate creates a distortion, thus, lending an amount of credibility. This …
Persistent link: https://www.econbiz.de/10013150973
incorporate information about future interest rate announcements: “inattention”, “credibility”, “finite planning horizon”, and …
Persistent link: https://www.econbiz.de/10012830239
Transparency has become an almost universal virtue among central banks. The paper tests empirically, for the case of the Federal Reserve, two hypotheses about central bank transparency derived from the debate of Morris and Shin (2002) and Svensson (2006). First, the paper finds that the...
Persistent link: https://www.econbiz.de/10012751806