This paper extends the utility-based welfare criterion developed by Woodford (2003) to a model with labour market search. We show how the central banker’s concern for inflation stabilization depends on the average steady-state durations of unemployment and job vacancy.

Central Banker’s Behaviour in an Uncertain EnvironmentSeveral recent papers are devoted to the examination of the central banker’s behaviour in an uncertain economic environment. This paper proposes, from a central banker’s point of view, a synthesis of the main sources of uncertainty as...

This paper quantifies the effects on welfare of misspecified monetary policy objectives in a stylized DSGE model. We show that using inappropriate objectives generates relatively large welfare costs. When expressed in terms of ‘consumption equivalent’ units, these costs correspond to...

In recent years, the dynamics of M3 in the euro area have been driven by two factors : a strong preference for liquidity, observed between 2001 and 2003, followed by a normalisation, at a relatively moderate pace, of portfolio behaviour; as regards the counterparts, changes in M3 and net...

This paper is a quantitative investigation into the characteristics of the Laffer curve in a neoclassical growth model with incomplete markets and heterogeneous, liquidity-constrained agents. We show that the shape of the Laffer curves related to taxes on labor, capital and consumption...

This article assesses monetary policy?s performances in the Euro zone in the face of supply shocks. We determine the responses of output, inflation, labor share and the nominal interest rate to a supply shock as identified through a structural var model. We then develop a dsge model with nominal...

The 'Brainard conservatism principle' states that the optimal monetary policy rule should be less aggressive when uncertainty about parameters is taken into account. However, this principle is not fully general and may be reversed in some cases. This paper examines the implications of parameter...