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shortfalls in inflation and output relative to exogenous trends, and the policy rate is kept at the ELB until the joint shortfall … is made up. Bernanke's second proposal adds only the cumulative inflation shortfall since the beginning of an ELB episode … directly to an otherwise standard Taylor rule. This cumulative shortfall in inflation from the 2 percent objective can be …
Persistent link: https://www.econbiz.de/10012016089
The pickup in the U.S. inflation rate to its highest rates in forty years has led to renewed attention being given to … the Great Inflation of the 1970s. This paper asks with regard to the Great Inflation: “How did it happen?” The answer … guided by a faulty doctrine—a nonmonetary view of inflation that perceived the concerted restraint of aggregate demand as …
Persistent link: https://www.econbiz.de/10014082645
This paper documents two facts about countries with floating exchange rates where monetary policy controls inflation … horizon. Second, the real exchange rate is virtually uncorrelated with future inflation rates both in the short run and in the …
Persistent link: https://www.econbiz.de/10014121933
We investigate how liquidity regulations affect banks by examining a dormant monetary policy tool that functions as a liquidity regulation. Our identification strategy uses a regression kink design that relies on the variation in a marginal high-quality liquid asset (HQLA) requirement around an...
Persistent link: https://www.econbiz.de/10012181216
Does banks' exposure to interest rate risk change when interest rates are very low or even negative? Using a high-frequency event study methodology and intraday data, we find that the effect of surprise interest rate cuts announced by the ECB on European bank equity values - an effect that is...
Persistent link: https://www.econbiz.de/10012182094
We consider three ways that a monetary policy framework may employ a range for inflation outcomes: (1) ranges that … acknowledge uncertainty about inflation outcomes (uncertainty ranges), (2) ranges that define the scope for intentional deviations … of inflation from its target (operational ranges), and (3) ranges over which monetary policy will not react to inflation …
Persistent link: https://www.econbiz.de/10014048772
Friedman and Schwartz (1982) and Goodhart (1982) report a zero correlation between money growth and output growth in U.K. historical data. This finding is puzzling, as there is wide agreement that changes in monetary policy are frequently nonneutral in the short run and that the U.K. experience,...
Persistent link: https://www.econbiz.de/10013106773
price level. The analysis compares the properties of optimal policy in regimes ranging from pure inflation targeting (IT …), to a form of weighted-average inflation targeting (WAIT), to pure price level targeting (PLT). Strategies such as WAIT …
Persistent link: https://www.econbiz.de/10014048722
The topic of the Federal Reserve’s (the Fed’s) implementation of monetary policy has a significant presence in economics textbooks as well as standards and guidelines for economics instruction. This presence likely reflects the fact that it is the implementation framework that helps ensure...
Persistent link: https://www.econbiz.de/10014048728
COVID-19 has depressed economic activity around the world. The initial contraction may be amplified by the limited space for conventional monetary policy actions to support recovery implied by the low level of nominal interest rates recently. Model simulations assuming an initial contraction in...
Persistent link: https://www.econbiz.de/10014048734