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In recent years, central bankers throughout the world have advocated that monetary policy shift toward inflation targeting. Recent actions in the U.S. serve to highlight the desire of the Federal Reserve to keep inflation both low and stable, while downplaying the likely output and employment...
Persistent link: https://www.econbiz.de/10013216862
This paper investigates the effects of wage indexation on the time-consistent level of inflation. Departing from previous work on time-consistent policy, we study a structural model of the economy. Indexation reduces the cost of inflation, which is inflationary, and steepens the Phillips curve,...
Persistent link: https://www.econbiz.de/10013218529
This paper discusses how optimal monetary policy is affected by differences in the combination of shocks an economy experiences and the rigidities it exhibits. Without both nominal rigidities and economic shocks, monetary policy would be irrelevant. Recognizing this, policymakers increasingly...
Persistent link: https://www.econbiz.de/10013223871
As central bankers intensify their focus on inflation as the primary goal of monetary policy, it becomes increasingly important to have accurate and reliable measures of changes in the aggregate price level. Measuring inflation is surprisingly difficult, involving two types of problems. Commonly...
Persistent link: https://www.econbiz.de/10013231567
The design of rules for central bank policy has been a subject of increasing interest to many monetary economists. The purpose of this essay is first to present an analytical structure in which a policymaker is presumed to formulate a rule based on the solution to an optimal control problem, and...
Persistent link: https://www.econbiz.de/10013237011
procyclical impact of bank capital requirements. By contrast, central bankers in Germany and Japan clearly do not act as the … theory suggests they should …
Persistent link: https://www.econbiz.de/10013230822