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Discretionary monetary policy in the Calvo model

Zandweghe, Willem Van; Wolman, Alexander - Federal Reserve Bank of Richmond - 2011

-period Taylor model, discretionary policy in the Calvo model does not accommodate predetermined prices in a way that inevitably …

Persistent link: https://www.econbiz.de/10009321093

Optimal monetary policy

Khan, Aubhik; King, Robert G.; Wolman, Alexander L. - Federal Reserve Bank of Richmond - 2000

Optimal monetary policy maximizes welfare, given frictions in the economic environment. Constructing a model with two sets of frictions - the Keynesian friction of costly price adjustment by imperfectly competitive firms and the Monetarist friction of costly exchange of wealth for goods - we...

Persistent link: https://www.econbiz.de/10004993913

The case for price stability

Goodfriend, Marvin; King, Robert G. - Federal Reserve Bank of Richmond - 2001

Reasoning within the New Neoclassical Synthesis (NNS) we previously recommended that price stability should be the primary objective of monetary policy. We called this a neutral policy because it keeps output at its potential, defined as the outcome of an imperfectly competitive real business...

Persistent link: https://www.econbiz.de/10004993924

The optimal rate of inflation with trending relative prices

Wolman, Alexander L. - Federal Reserve Bank of Richmond - 2009

The relative prices of different categories of consumption goods have been trending over time. Assuming they are … exogenous with respect to monetary policy, these trends imply that monetary policy cannot stabilize the prices of all … consumption categories. If prices are sticky, monetary policy then must trade off relative price distortions within different …

Persistent link: https://www.econbiz.de/10005009949

Deep habits in the New Keynesian Phillips curve

Lubik, Thomas A.; Teo, Wing Leong - Federal Reserve Bank of Richmond - 2011

We derive and estimate a New Keynesian Phillips curve (NKPC) in a model where consumers are assumed to have deep habits. Habits are deep in the sense that they apply to individual consumption goods instead of aggregate consumption. This alters the NKPC in a fundamental manner as it introduces...

Persistent link: https://www.econbiz.de/10010551314

Fiscal policy and regional inflation in a currency union

Duarte, Margarida; Wolman, Alexander L. - Federal Reserve Bank of Richmond - 2003

This paper investigates the ability of a region participating in a currency union to affect its inflation differential with respect to the union through fiscal policy. We study the interaction between regional fiscal policy and inflation differentials in a flexible-price, two-region model with...

Persistent link: https://www.econbiz.de/10004993883

The welfare cost of inflation in general equilibrium

Dotsey, Michael; Ireland, Peter - Federal Reserve Bank of Richmond - 1994

This paper presents a general equilibrium monetary model in which inflation distorts a variety of marginal decisions. Although individually none of the distortions is very large, they combine to yield substantial welfare cost estimates. A sustained 4% inflation like that experienced in the U.S....

Persistent link: https://www.econbiz.de/10004993890

Inflation dynamics with search frictions : a structural econometric analysis

Krause, Michael U.; Lubik, Thomas A.; López-Salido, David - Federal Reserve Bank of Richmond - 2008

The New Keynesian Phillips curve explains inflation dynamics as being driven by current and expected future real marginal costs. In competitive labor markets, the labor share can serve as a proxy for the latter. In this paper, we study the role of real marginal cost components implied by search...

Persistent link: https://www.econbiz.de/10004993907

Wage growth and the inflation process: an empirical note

Mehra, Yash P. - Federal Reserve Bank of Richmond - 1989

A central proposition in the Phillips curve view of the inflation process is that prices are marked up over … productivity-adjusted labor costs. If that is true, then long-run movements in prices and labor costs must be correlated. If long … common stochastic trends. The evidence reported here shows that time series measuring rates of change in prices and labor …

Persistent link: https://www.econbiz.de/10004993909

Fisher, Thorton and the analysis of the inflation premium

Beranek, William; Humphrey, Thomas M.; Richard H. … - Federal Reserve Bank of Richmond - 1984

Virtually all references to the Fisher Effect assume that its appearance in nominal interest rates is a simultaneous result of borrower and lender effects. However, Irving Fisher, and Henry Thornton before him emphasized the activist role on the borrower (demand) side of the loan market. Their...

Persistent link: https://www.econbiz.de/10004993921