Optimal Monetary Policy In A Model With Habit Formation
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Optimal Monetary Policy In A Model With Habit Formation
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Author : Jeffrey C. Fuhrer
language : en
Publisher:
Release Date : 2000
Optimal Monetary Policy In A Model With Habit Formation written by Jeffrey C. Fuhrer and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2000 with Consumption (Economics) categories.
Optimal Monetary Policy In A Small Open Economy With Habit Formation And Nominal Rigidities
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Author : Woon Gyu Choi
language : en
Publisher: International Monetary Fund
Release Date : 2003
Optimal Monetary Policy In A Small Open Economy With Habit Formation And Nominal Rigidities written by Woon Gyu Choi and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003 with Business & Economics categories.
Introducing habit formation into an open economy macroeconomic model with price stickiness, we examine the characteristics of an optimal monetary policy. We find that, first, the optimal policy rule entails interest rate smoothing and responds to the lagged values of the foreign interest rate and domestic technology shocks as well as their current values. Second, habit formation enriches the dynamics of the economy with a persistent, hump-shaped response of consumption to shocks. Finally, when habit formation does matter, the optimal policy rule achieves a greater welfare improvement over alternative policy rules by achieving lower macroeconomic variability.
Optimal Monetary Policy Under Uncertainty Second Edition
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Author : Richard T. Froyen
language : en
Publisher: Edward Elgar Publishing
Release Date : 2019
Optimal Monetary Policy Under Uncertainty Second Edition written by Richard T. Froyen and has been published by Edward Elgar Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with Mathematical optimization categories.
This book provides a thorough survey of the model-based literature on optimal monetary in a stochastic setting. The survey begins with the literature of the 1970s which focused on the information problem in policy design and extends to the New Keynesian approach of the 1990s which centered on evaluating alternative targeting strategies. New to the second edition is consideration of research since the world financial crisis on the role of financial markets and institutions in the conduct of monetary policy.
Money As Indicator For The Natural Rate Of Interest
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Author : Mr.Helge Berger
language : en
Publisher: International Monetary Fund
Release Date : 2012-01-01
Money As Indicator For The Natural Rate Of Interest written by Mr.Helge Berger and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-01-01 with Business & Economics categories.
The natural interest rate is of great relevance to central banks, but it is difficult to measure. We show that in a standard microfounded monetary model, the natural interest rate co-moves with a transformation of the money demand that can be computed from actual data. The co-movement is of a considerable magnitude and independent of monetary policy. An optimizing central bank that does not observe the natural interest rate can take advantage of this co-movement by incorporating the transformed money demand, in addition to the observed output gap and inflation, into a simple but optimal interest rate rule. Combining the transformed money demand and the observed output gap provides the best information about the natural interest rate.
Optimal Operational Monetary Policy In The Christiano Eichenbaum Evans Model Of The Us Business Cycle
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Author : Stephanie Schmitt-Grohé
language : en
Publisher:
Release Date : 2004
Optimal Operational Monetary Policy In The Christiano Eichenbaum Evans Model Of The Us Business Cycle written by Stephanie Schmitt-Grohé and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Business cycles categories.
This paper identifies optimal interest-rate rules within a rich, dynamic, general equilibrium model that has been shown to account well for observed aggregate dynamics in the postwar United States. We perform policy evaluations based on second-order accurate approximations to conditional and unconditional expected welfare. We require that interest-rate rules be operational, in the sense that they include as arguments only a few readily observable macroeconomic indicators and respect the zero bound on nominal interest rates. We find that the optimal operational monetary policy is a real-interest-rate targeting rule. That is, an interest-rate feedback rule featuring a unit inflation coefficient, a mute response to output, and no interest-rate smoothing. Contrary to existing studies, we find a significant degree of optimal inflation volatility. A key factor driving this result is the assumption of indexation to past inflation. Under indexation to long-run inflation the optimal inflation volatility is close to zero. Finally, we show that initial conditions matter for welfare rankings of policies.
Optimal Monetary Policy Under Bounded Rationality
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Author : Jonathan Benchimol
language : en
Publisher: International Monetary Fund
Release Date : 2019-08-02
Optimal Monetary Policy Under Bounded Rationality written by Jonathan Benchimol and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-08-02 with Business & Economics categories.
The form of bounded rationality characterizing the representative agent is key in the choice of the optimal monetary policy regime. While inflation targeting prevails for myopia that distorts agents' inflation expectations, price level targeting emerges as the optimal policy under myopia regarding the output gap, revenue, or interest rate. To the extent that bygones are not bygones under price level targeting, rational inflation expectations is a minimal condition for optimality in a behavioral world. Instrument rules implementation of this optimal policy is shown to be infeasible, questioning the ability of simple rules à la Taylor (1993) to assist the conduct of monetary policy. Bounded rationality is not necessarily associated with welfare losses.
An Optimizing Model For Monetary Policy Analysis
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Author : Jeffrey C. Fuhrer
language : en
Publisher:
Release Date : 1998
An Optimizing Model For Monetary Policy Analysis written by Jeffrey C. Fuhrer and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1998 with Consumption (Economics) categories.
Expectations And The Stability Problem For Optimal Monetary Policies
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Author : George W. Evans
language : en
Publisher:
Release Date : 2001
Expectations And The Stability Problem For Optimal Monetary Policies written by George W. Evans and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with Economic stabilization categories.
Habit Formation And The Persistence Of Monetary Shocks
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Author : Cardia, Emanuela
language : en
Publisher: Montréal : Université de Montréal, Dép. de sciences économiques
Release Date : 2002
Habit Formation And The Persistence Of Monetary Shocks written by Cardia, Emanuela and has been published by Montréal : Université de Montréal, Dép. de sciences économiques this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with Equilibrium (Economics) categories.
Designing A Simple Loss Function For Central Banks
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Author : Davide Debortoli
language : en
Publisher: International Monetary Fund
Release Date : 2017-07-21
Designing A Simple Loss Function For Central Banks written by Davide Debortoli and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-07-21 with Business & Economics categories.
Yes, it makes a lot of sense. This paper studies how to design simple loss functions for central banks, as parsimonious approximations to social welfare. We show, both analytically and quantitatively, that simple loss functions should feature a high weight on measures of economic activity, sometimes even larger than the weight on inflation. Two main factors drive our result. First, stabilizing economic activity also stabilizes other welfare relevant variables. Second, the estimated model features mitigated inflation distortions due to a low elasticity of substitution between monopolistic goods and a low interest rate sensitivity of demand. The result holds up in the presence of measurement errors, with large shocks that generate a trade-off between stabilizing inflation and resource utilization, and also when ensuring a low probability of hitting the zero lower bound on interest rates.