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Optimality of the Friedman rule in an overlapping generations model with spatial separation

Haslag, Joseph H.; Martin, Antoine - 2005

disparity between theory and practice concerning optimal monetary policy; these models suggest that the Friedman rule may not be …

Persistent link: https://www.econbiz.de/10010283475

International dimensions of optimal monetary policy

Corsetti, Giancarlo; Pesenti, Paolo - 2001

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

Inflation persistence: Alternative interpretations and policy implications

Sbordone, Argia M. - 2007

In this paper, I consider the policy implications of two alternative structural interpretations of observed inflation persistence, which correspond to two alternative specifications of the new Keynesian Phillips curve (NKPC). The first specification allows for some degree of intrinsic...

Persistent link: https://www.econbiz.de/10010283489

Central bank transparency and nonlinear learning dynamics

Eusepi, Stefano - 2008

Central bank communication plays an important role in shaping market participants' expectations. This paper studies a simple nonlinear model of monetary policy in which agents have incomplete information about the economic environment. It shows that agents' learning and the dynamics of the...

Persistent link: https://www.econbiz.de/10010283511

The term structure of inflation expectations

Adrian, Tobias; Wu, Hao - 2009

We present estimates of the term structure of inflation expectations, derived from an affine model of real and nominal yield curves. The model features stochastic covariation of inflation with the real pricing kernel, enabling us to extract a time-varying inflation risk premium. We fit the model...

Persistent link: https://www.econbiz.de/10010283537

Stabilizing expectations under monetary and fiscal policy coordination

Eusepi, Stefano; Preston, Bruce - 2008

This paper analyzes how the formation of expectations constrains monetary and fiscal policy design. Economic agents have imperfect knowledge about the economic environment and the policy regime in place. Households and firms learn about the policy regime using historical data. Regime uncertainty...

Persistent link: https://www.econbiz.de/10010283550

Model selection for monetary policy analysis: How important is empirical validity?

Akram, Q. Farooq; Nymoen, Ragnar - 2007

We investigate the economic significance of trading off empirical validity of models against other desirable model properties, and the potential loss from ’overestimating’ model uncertainty and basing monetary policy on a relatively robust model, or on a suite of models. We find that...

Persistent link: https://www.econbiz.de/10010284286

Monetary policy and nominal rigidities under low inflation

Holden, Steinar - 2001

nominal wages have to be cut, worker’s stronger bargaining position requires higher unemployment in equilibrium. The upshot is … a long run trade off between inflation and unemployment for low levels of inflation. The prediction that low inflation … involves higher unemployment in Europe but not in the US is consistent with previous empirical findings. …

Persistent link: https://www.econbiz.de/10010284410

A note on inflation persistence

Holden, Steinar; Driscoll, John C. - 2001

past real wages, e.g. because unemployment insurance depends on past wages, as noted in Blanchard and Katz (1999 …

Persistent link: https://www.econbiz.de/10010284416

Inflation targeting strategies in small open economies

Leitemo, Kai - 1999

According to recent literature on monetary policy, there are two different interpretations of inflation targeting; (1) an instrument rule that responds to a measure of inflation (forecast) deviations from target and (2) a discretionary optimizing strategy towards minimizing the inflation...

Persistent link: https://www.econbiz.de/10010284456