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This paper identifies optimal policy rules in the presence of explicit targets for both the inflation rate and public debt. This issue is investigated in the context of a dynamic stochastic general equilibrium model that describes a small open economy with capital accumulation, distortionary...
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Stochastic inflation affects the risk characteristics, measured by the equity premium and the correlation of the equity’s return with consumption, in a fundamental way. The riskiness of a dollar-denominated asset depends on two conditional covariances: the covariance of the marginal rate of...
Persistent link: https://www.econbiz.de/10005372834
with price stability. Because stable prices are essential to maximum long-term economic growth and living standards, the … first examines the behavior of inflation over the past year, showing that sharp increases in food and energy prices caused … most overall inflation measures to rise, while inflation in nonfood and nonenergy prices slowed. Second, he shows that …
Persistent link: https://www.econbiz.de/10005373355
The primary goal of Federal Reserve monetary policy is to foster maximum sustainable growth in the U.S. economy by achieving price stability over time. Although considerable progress toward price stability has been made since the early 1980s, inflation remains above the level most analysts would...
Persistent link: https://www.econbiz.de/10005373392
Some key features of the behavior of inflation in the United States appear to have changed in the past 20 years, with potentially important implications for forecasters and policymakers. Recent studies have provided evidence of a decline in both the variability and persistence of inflation. ;...
Persistent link: https://www.econbiz.de/10005373502