Showing 1 - 10 of 26
This paper presents a prototype model for development of the fiscal theory of the price level.' In this simple setting …, the fiscal theory's distinctiveness relies upon adoption of a bubble solution, rather than the rational …
Persistent link: https://www.econbiz.de/10013136352
Should central banks, because of the zero-lower-bound problem, raise their inflation-rate targets? Several arguments are relevant. (1) In the absence of the ZLB, the optimal steady-state inflation rate, according to standard New Keynesian reasoning, lies between the Friedman-rule value of...
Persistent link: https://www.econbiz.de/10013125586
In analyses of "liquidity trap" problems associated with the zero lower bound (ZLB) on nominal interest rates, it is important to emphasize the difference between policy rule changes, intended to help escape an existing ZLB situation, and maintained policy rules designed so as to avoid ZLB...
Persistent link: https://www.econbiz.de/10013100640
The recently-developed fiscal theory of price level determination contends that there is an important class of policy …
Persistent link: https://www.econbiz.de/10013215355
This paper reviews the distinction between the timeless perspective and discretionary modes of monetary policymaking, the former representing rule-based policy as recently formalized by Woodford (1999b). In models with forward-looking expectations, this distinction is greater than in the models...
Persistent link: https://www.econbiz.de/10013215694
In a recent paper, Canzoneri, Henderson, and Rogoff have shown that it is possible for the monetary authority to peg the nominal interest rate without creating price level indeterminacy in a simplified version of the 1975 Sargent-Wallace model. The present paper begins by reviewing that result,...
Persistent link: https://www.econbiz.de/10013219333
This paper reconsiders a result obtained by Sargent and Wallace, namely, that price level indeterminacy obtains in their well-known model if the monetary authorities adopt a policy feedback rule for the interest rate rather than the money stock. Since the Federal Reserve seems often to have used...
Persistent link: https://www.econbiz.de/10013219724
Svensson (JEL, 2003) argues strongly that specific targeting rules first order optimality conditions for a specific objective function and model are normatively superior to instrument rules for the conduct of monetary policy. That argument is based largely upon four main objections to the latter...
Persistent link: https://www.econbiz.de/10013221112
This paper addresses a prominent empirical failure of the expectations theory of the term structure of interest rates … rationalized with the expectations theory by recognition of an exogenous random (but possibly autoregressive) term premium plus the …
Persistent link: https://www.econbiz.de/10013221299
Recent experience does not include a "monetarist experiment," as some have argued, but may slightly reinforce preexisting reasons for doubting that the best way of formulating monetarist policy prescriptions is in the form of a constant growth rule for the money stock.A more desirable rule would...
Persistent link: https://www.econbiz.de/10013221547