Showing 1 - 10 of 52
Persistent link: https://www.econbiz.de/10001731309
This paper considers the desirability of the observed tendency of central banks to adjust interest rates only gradually in response to changes in economic conditions. It shows, in the context of a simple model of optimizing private-sector behavior, that such inertial policy can be optimal. The...
Persistent link: https://www.econbiz.de/10012471529
We analytically characterize optimal monetary policy for an augmented New Keynesian model with a housing sector. With rational private sector expectations about housing prices and inflation, optimal monetary policy can be characterized by a standard "target criterion" in terms of inflation and...
Persistent link: https://www.econbiz.de/10012479356
complexity of memory measured using Shannon's mutual information, as in models of rational inattention; but our theory differs …
Persistent link: https://www.econbiz.de/10012479434
We propose a new approach to modeling the cost of information structures in rational inattention problems, the "neighborhood-based" cost functions. These cost functions have two properties that we view as desirable: they summarize the results of a sequential evidence accumulation problem, and...
Persistent link: https://www.econbiz.de/10012480967
This paper reconsiders the degree to which macroeconomic stabilization is possible when the zero lower bound is a relevant constraint on the effectiveness of conventional monetary policy, under an assumption of bounded rationality. In particular, we reconsider the potential role of...
Persistent link: https://www.econbiz.de/10012481376
While many analyses of monetary policy consider only a target for a short-term nominal interest rate, other dimensions of policy have recently been of greater importance: changes in the supply of bank reserves, changes in the assets acquired by central banks, and changes in the interest rate...
Persistent link: https://www.econbiz.de/10012462447
This paper reviews the theory of optimal monetary stabilization policy, with an emphasis on developments since the …
Persistent link: https://www.econbiz.de/10012462560
. The imperfect information is endogenized using a variant of the theory of "rational inattention" proposed by Sims (1998 …
Persistent link: https://www.econbiz.de/10012464027
Forecast targeting is an innovation in central banking that represents an important step toward more rule-based policymaking, even if it is not an attempt to follow a policy rule of any of the types that have received primary attention in the theoretical literature on optimal monetary policy....
Persistent link: https://www.econbiz.de/10012464930