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Optimal Fiscal and Monetary Policy with Occasionally Binding Zero Bound Constraints

Nakata, Taisuke - 2013

This paper studies optimal government spending and monetary policy when the nominal interest rate is subject to the zero lower bound constraint in a stochastic New Keynesian economy. I find that the government chooses to increase its spending when at the zero lower bound by a substantially...

Persistent link: https://www.econbiz.de/10013078458

Taxation and the Taylor Principle

Edge, Rochelle M.; Rudd, Jeremy B. - 2003

We add a nominal tax system to a sticky-price monetary business cycle model. When nominal interest income is taxed, the coefficient on inflation in a Taylor-type monetary policy rule must be significantly larger than one in order for the model economy to have a determinate rational expectations...

Persistent link: https://www.econbiz.de/10014101411

Robust Monetary Policy with Misspecified Models : Does Model Uncertainty Always Call for Attenuated Policy?

Tetlow, Robert; Von zur Mühlen, Peter - 2022

This paper explores Knightian model uncertainty as a possible explanation of the considerable difference between estimated interest rate rules and optimal feedback descriptions of monetary policy. We focus on two types of uncertainty: (i) unstructured model uncertainty reflected in additive...

Persistent link: https://www.econbiz.de/10014080465

The Equity Premium, Long-Run Risk, & Optimal Monetary Policy

Diercks, Anthony M. - 2015

labor share of income. I show that this channel is generally absent in standard macroeconomic models that do not take risk …

Persistent link: https://www.econbiz.de/10013014250

The Risk-Adjusted Monetary Policy Rule

Nakata, Taisuke - 2016

Macroeconomists are increasingly using nonlinear models to account for the effects of risk in the analysis of business … cycles. In the monetary business cycle models widely used at central banks, an explicit recognition of risk generates a wedge … modification to the standard monetary policy rule to eliminate the wedge. In the proposed risk-adjusted policy rule, the intercept …

Persistent link: https://www.econbiz.de/10012985460

Welfare-Maximizing Monetary Policy Under Parameter Uncertainty

Edge, Rochelle M. - 2007

This paper examines welfare-maximizing monetary policy in an estimated micro-founded general equilibrium model of the U.S. economy where the policymaker faces uncertainty about model parameters. Uncertainty about parameters describing preferences and technology implies not only uncertainty about...

Persistent link: https://www.econbiz.de/10012729402

Some implications of uncertainty and misperception for monetary policy

Erceg, Christopher J.; Hebden, James; Kiley, Michael T.; … - 2018

When choosing a strategy for monetary policy, policymakers must grapple with mismeasurement of labor market slack, and of the responsiveness of price inflation to that slack. Using stochastic simulations of a small-scale version of the Federal Reserve Boardâ€™s principal New Keynesian...

Persistent link: https://www.econbiz.de/10012016122

Uncertain potential output : implications for monetary policy

Ehrmann, Michael - 2001

Persistent link: https://www.econbiz.de/10013434349

Non-standard central bank loss functions, skewed risks, and certainty equivalance

Al-Nowaihi, Ali - 2002

Persistent link: https://www.econbiz.de/10013434451

Modeling model uncertainty : international seminar on macroeconomics

Onatski, Alexei - 2002

Persistent link: https://www.econbiz.de/10013434492