Showing 1 - 10 of 130
In a floor system of monetary policy implementation, the central bank remunerates bank reserves at or near the market rate of interest. Some observers have expressed concern that operating such a system will have adverse fiscal consequences for the public sector and may even require the...
Persistent link: https://www.econbiz.de/10011460634
The landscape of the federal funds market changed drastically in the wake of the Great Recession as large-scale asset purchase programs left depository institutions awash with reserves and new regulations made it more costly for these institutions to lend. As traditional levers for implementing...
Persistent link: https://www.econbiz.de/10011942785
Most macroeconomic models for monetary policy analysis are approximated around a zeroinflation steady state, but most central banks target inflation at a rate of about 2 percent. Many economists have recently proposed even higher inflation targets to reduce the incidence of the zero lower bound...
Persistent link: https://www.econbiz.de/10010333596
New Keynesian theory identifies a set of principles central to the design and implementation of monetary policy. These principles rely on the ability of a central bank to manage expectations precisely, with policy prescriptions typically derived under the assumption of perfect information and...
Persistent link: https://www.econbiz.de/10011538012
This paper provides an introduction to the recent literature on macroeconomic stabilization in closed and open economies. We present a stylized theoretical framework, illustrating its main properties with the help of an intuitive graphical apparatus. Among the issues we discuss are optimal...
Persistent link: https://www.econbiz.de/10010283317
This paper explores the effects of central bank transparency on the performance of optimal inflation targeting rules. I assume that both the central bank and the private sector face uncertainty about the correct model of the economy and have to learn. A transparent central bank can reduce one...
Persistent link: https://www.econbiz.de/10010283330
This paper provides a review of the concept of core inflation and evaluates the performance of several proposed measures. We first consider the rationale of a central bank in setting its inflation goal in terms of a selected rate of consumer price growth and the use of a core inflation measure...
Persistent link: https://www.econbiz.de/10010283372
We estimate the macroeconomic benefits and international spillovers of an increase in competition using a general-equilibrium simulation model with nominal rigidities and monopolistic competition in product and labor markets. We draw three conclusions after calibrating the model to the euro area...
Persistent link: https://www.econbiz.de/10010283416
We provide a tractable model to study monetary policy under discretion. We restrict our analysis to Markov equilibria. We find that for all parametrizations with an equilibrium inflation rate of about 2 percent, there is a second equilibrium with an inflation rate just above 10 percent. Thus,...
Persistent link: https://www.econbiz.de/10010283471
This paper provides a baseline general-equilibrium model of optimal monetary policy among interdependent economies with monopolistic firms that set prices one period in advance. Strict adherence to inward-looking policy objectives such as the stabilization of domestic output cannot be optimal...
Persistent link: https://www.econbiz.de/10010283479