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We examine potential nonlinear behaviour in the conduct of monetary policy by the Bank of England. We find significant nonlinearity in this policy setting, and in particular that the standard Taylor rule really only begins to bite once expected inflation is significantly above its target. This...
Persistent link: https://www.econbiz.de/10005246299
Non-coordinated monetary policy is analysed in a stochastic two-country general equilibrium model. Non-coordinated equilibria are compared in two cases: one where policy is set in terms of state-contingent money supply rules, and one where policy is set in terms of state-contingent nominal...
Persistent link: https://www.econbiz.de/10005498154
This paper examines various interest rate rules, as well as policies derived by solving optimal control problems, for their ability to dampen economic fluctuations caused by random shocks. A tax rate rule is also considered. A multicountry econometric model is used for the experiments. The...
Persistent link: https://www.econbiz.de/10005368982
We explore the stability properties of interest rate rules granting an explicit response to stock prices in a New-Keynesian DSGE model populated by Blanchard-Yaari non-Ricardian households. The constant turnover between long-time stock holders and asset-poor newcomers generates a financial...
Persistent link: https://www.econbiz.de/10011163119
We study the normative implications of a New Keynesian model featuring intersectoral trade of intermediate goods between two sectors that produce durables and non-durables. The interplay between durability and sectoral production linkages fundamentally alters the intersectoral stabilization...
Persistent link: https://www.econbiz.de/10011165393
This paper examines a class of interest rate rules that respond to public expectations and to lagged variables. Varying levels of commitment correspond to varying degrees of response to lagged output and targeting of the price level. If the response rises (unintentionally) above the optimal...
Persistent link: https://www.econbiz.de/10010818976
Since March 2011 the projections published by the Magyar Nemzeti Bank have been prepared using the Monetary Policy Model (MPM), in which interest rates are determined endogenously as a function of macroeconomic variables. This paper explains the characteristics of the interest rate rule of the...
Persistent link: https://www.econbiz.de/10010898283
In a recent paper, Adão et al. (2011), using a cash-in-advance framework, derive an interest rate rule that results in a unique monetary equilibrium. The resulting interest rate rule is forward looking and the interest rate responds positively to forecasts of future real activity and to...
Persistent link: https://www.econbiz.de/10011041683
No. I demonstrate that econometric estimations of nominal interest rate rules may tell little, if anything, about an economy's determinacy properties. In particular, correct inference about the interest-rate response to inflation provides no information about determinacy. Instead, it could...
Persistent link: https://www.econbiz.de/10008558582
Persistent link: https://www.econbiz.de/10005014979