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Inflation dynamics when inflation is near zero

Fuhrer, Jeffrey C.; Olivei, Giovanni P.; Tootell, … - 2011 - This version: September, 2011

This paper discusses the likely evolution of U.S. inflation in the near and medium term on the basis of (1) past U.S. experience with very low levels of inflation, (2) the most recent Japanese experience with deflation, and (3) recent U.S. micro evidence on downward nominal wage rigidity. Our...

Persistent link: https://www.econbiz.de/10009500929

Capital and Macroeconomic Instabilty in a Discrete-Time Model with Forward-Looking Interest Rate Rules

Huang, Kevin X. D.; Meng, Qinglai - 2019

show that (i) indeterminacy is more likely to occur with a greater share of payment to capital in value-added production … cost; (ii) indeterminacy can be more or less likely to occur with constant capital than with variable capital; (iii …) indeterminacy is more likely to occur when prices are modelled as jump variables than as predetermined variables; (iv) indeterminacy …

Persistent link: https://www.econbiz.de/10014053031

Indeterminacy of Ramsey Model Under Heterogeneous Time Preference, Transversality Condition Issues, Theories of Price Level and Uniform Rate of Interest

Kim, Bryce - 2016

This paper presents a simple Ramsey-type model example where two infinitely-living agents have same utility function except for time preference, and shows that equilibrium is indeterminate that is to be interpreted as being non-existent. The issues regarding New Keynesian transversality...

Persistent link: https://www.econbiz.de/10012982564

Economic policy in India : for economic stimulus, or for austerity and volatility?

Sen, Sunanda; DasGupta, Zico - 2014

The implementation of economic reforms under new economic policies in India was associated with a paradigmatic shift in monetary and fiscal policy. While monetary policies were solely aimed at "price stability" in the neoliberal regime, fiscal policies were characterized by the objective of...

Persistent link: https://www.econbiz.de/10010385761

Optimal monetary and fiscal policy with a zero bound on nominal interest rates

Schmidt, Sebastian - 2012

I characterize optimal monetary and fiscal policy in a stochastic New Keynesian model when nominal interest rates may occasionally hit the zero lower bound. The benevolent policymaker controls the short-term nominal interest rate and the level of government spending. Under discretionary policy,...

Persistent link: https://www.econbiz.de/10010391983

Inflation persistence, Price Indexation and Optimal Simple Interest Rate Rules

Ascari, Guido; Branzoli, Nicola - 2010

We study the properties of the optimal nominal interest rate policy under different levels of price indexation. In our model indexation regulates the sources of inflation persistence. When indexation is zero, the inflation gap is purely forward- looking and inflation persistence depends only on...

Persistent link: https://www.econbiz.de/10010343884

Exchange rate and price dynamics at the zero lower bound : conference paper

Bäurle, Gregor; Kaufmann, Daniel - 2013

In this paper, we analyse nominal exchange rate and price dynamics after risk shocks with short-term interest rates constrained by the zero lower bound (ZLB). We show with a stylized theoretical model that temporary risk shocks may lead to permanent shifts of the exchange rate and the price...

Persistent link: https://www.econbiz.de/10010340556

The Optimal Inflation Buffer with a Zero Bound on Nominal Interest Rates

Billi, Roberto M. - 2005

This paper characterizes the optimal inflation buffer consistent with a zero lower bound on nominal interest rates in a New Keynesian sticky-price model. It is shown that a purely forward-looking version of the model that abstracts from inflation inertia would significantly underestimate the...

Persistent link: https://www.econbiz.de/10014065790

The Zero Bound on Nominal Interest Rates and Optimal Monetary Policy Under Discretion

Nakov, Anton - 2004

I study how the zero bound on nominal interest rates affects optimal discretionary monetary policy within the standard New Keynesian framework. I find that the non-negativity constraint implies an optimal policy which is more expansionary and more aggressive near the zero bound compared to the...

Persistent link: https://www.econbiz.de/10014071977

Controlling Inflation With Interest Rate Rules in Models with Sticky Prices

Von zur Mühlen, Peter - 2022

inflation is price level and inflation indeterminacy. Therefore, policies that succeed in one kind of economy may not work in …

Persistent link: https://www.econbiz.de/10013404057