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Optimal monetary policy rules with labor market frictions

Faia, Ester (contributor) - 2006

This paper studies optimal monetary policy rules in a framework with sticky prices, matching frictions and real wage rigidities. Optimal monetary policy is given by a constrained Ramsey plan in which the monetary authority maximizes the agents’ welfare subject to the competitive economy...

Persistent link: https://www.econbiz.de/10003396811

The credibility of the monetary policy "free lunch"

Yetman, James - 2003

impose costs on society rather than beneﬁts. While rational expectations and perfect credibility are generally beneﬁcial with …

Persistent link: https://www.econbiz.de/10009635890

Quantitative goals for monetary policy

Fatás, Antonio (contributor); Mihov, Ilian (contributor); … - 2006

We study empirically the macroeconomic effects of an explicit de jure quantitative goal for monetary policy. Quantitative goals take three forms: exchange rates, money growth rates, and inflation targets. We analyze the effects on inflation of both having a quantitative target, and of hitting a...

Persistent link: https://www.econbiz.de/10003320664

Monetary policy with judgment : forecast targeting

Svensson, Lars E. O. (contributor) - 2005

"Forecast targeting," forward-looking monetary policy that uses central-bank judgment to construct optimal policy projections of the target variables and the instrument rate, may perform substantially better than monetary policy that disregards judgment and follows a given instrument rule. This...

Persistent link: https://www.econbiz.de/10003001709

Monetary policy and inflationary shocks under imperfect credibility

Darracq Pariès, Matthieu; Moyen, Stéphane - 2009

imperfect credibility and weak anchoring of long-term expectations. Within a medium-scale DSGE model, we introduce through a … credibility could amount to 0.25 pp of output gap standard deviation. -- Monetary policy ; Imperfect credibility ; Signal …

Persistent link: https://www.econbiz.de/10003867037

Forecasting the central bank' inflation objective is a good rule of thumb

Diron, Marie (contributor); Mojon, Benoît (contributor) - 2005

This paper first shows that the forecast error incurred when assuming that future inflation will be equal to the inflation target announced by the central bank is typically at least as small and often smaller than forecast errors of model-based and published inflation forecasts. It then shows...

Persistent link: https://www.econbiz.de/10003230432

The European Monetary Union as a commitment device for new EU member states

Ravenna, Federico (contributor) - 2005

This paper shows that the credibility gain from permanently committing to a fixed exchange rate by joining the European … credibility a pegged exchange rate regime yields a lower loss compared to an inflation targeting policy, even if this policy … ranking would be reversed in a fullcredibility environment. There exists an initial stock of credibility that must be achieved …

Persistent link: https://www.econbiz.de/10003057319

Counter-cyclical fiscal rules and the zero lower bound

Hauptmeier, Sebastian; Kamps, Christophe; Radke, Lucas - 2022

We analyse the effectiveness of optimal simple and implementable monetary and fiscal policy rules in stabilising economic activity, inflation and government debt in face of an occasionally binding lower bound on the nominal interest rate in a New Keynesian model. We show that, within the...

Persistent link: https://www.econbiz.de/10013342236

Expectations-driven liquidity traps : implications for monetary and fiscal policy

Nakata, Taisuke; Schmidt, Sebastian - 2019

We study optimal monetary and fiscal policy in a New Keynesian model where occasional declines in agents' confidence can give rise to persistent liquidity trap episodes. Unlike in the case of fundamental-driven liquidity traps, there is no straightforward recipe for mitigating the welfare costs...

Persistent link: https://www.econbiz.de/10012037377

Robust monetary rules under unstructured and structured model uncertainty

Levine, Paul (contributor); Pearlman, Joseph (contributor) - 2008

This paper compares two contrasting approaches to robust monetary policy design. The first developed by Hansen and Sargent (2003, 2007) assumes unstructured model uncertainty and uses a minimax robustness criterion to design monetary rules. This contrasts with an older literature that structures...

Persistent link: https://www.econbiz.de/10003778827

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