Habit Persistence and Optimal Interest-rate Smoothing
Author : Sanjay Chugh
Publisher :
Page : 134 pages
File Size : 37,3 MB
Release : 2004
Category :
ISBN :
Author : Sanjay Chugh
Publisher :
Page : 134 pages
File Size : 37,3 MB
Release : 2004
Category :
ISBN :
Author : Luisa Corrado
Publisher :
Page : pages
File Size : 23,77 MB
Release : 2012
Category :
ISBN :
Author : Woon Gyu Choi
Publisher : International Monetary Fund
Page : 40 pages
File Size : 12,1 MB
Release : 2003
Category : Business & Economics
ISBN :
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.
Author : Brian Sack
Publisher :
Page : 0 pages
File Size : 10,70 MB
Release : 1999
Category :
ISBN :
Author : Ben S. Bernanke
Publisher : University of Chicago Press
Page : 469 pages
File Size : 25,1 MB
Release : 2007-11-01
Category : Business & Economics
ISBN : 0226044734
Over the past fifteen years, a significant number of industrialized and middle-income countries have adopted inflation targeting as a framework for monetary policymaking. As the name suggests, in such inflation-targeting regimes, the central bank is responsible for achieving a publicly announced target for the inflation rate. While the objective of controlling inflation enjoys wide support among both academic experts and policymakers, and while the countries that have followed this model have generally experienced good macroeconomic outcomes, many important questions about inflation targeting remain. In Inflation Targeting, a distinguished group of contributors explores the many underexamined dimensions of inflation targeting—its potential, its successes, and its limitations—from both a theoretical and an empirical standpoint, and for both developed and emerging economies. The volume opens with a discussion of the optimal formulation of inflation-targeting policy and continues with a debate about the desirability of such a model for the United States. The concluding chapters discuss the special problems of inflation targeting in emerging markets, including the Czech Republic, Poland, and Hungary.
Author : Davide Debortoli
Publisher : International Monetary Fund
Page : 56 pages
File Size : 16,66 MB
Release : 2017-07-21
Category : Business & Economics
ISBN : 1484311752
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.
Author : Sanjay K. Chugh
Publisher :
Page : 40 pages
File Size : 12,25 MB
Release : 2005
Category : Fiscal policy
ISBN :
Author : Paul De Grauwe
Publisher : CEPS
Page : 22 pages
File Size : 37,20 MB
Release : 2008
Category : Monetary policy
ISBN : 929079819X
The question of whether central banks should target stock prices so as to prevent bubbles and crashes from occurring has been hotly debated. This paper analyses this question using a behavioural macroeconomic model. This model generates bubbles and crashes. It analyses how 'leaning against the wind' strategies, which aim to reduce the volatility of stock prices, can help in reducing volatility of output and inflation. We find that such policies can be effective in reducing macroeconomic volatility, thereby improving the trade-off between output and inflation variability. The strength of this result, however, depends on the degree of credibility of the inflation-targeting regime. In the absence of such credibility, policies aiming at stabilising stock prices do not stabilise output and inflation.
Author : Kenneth S. Rogoff
Publisher : MIT Press
Page : 479 pages
File Size : 49,42 MB
Release : 2006-04
Category : Business & Economics
ISBN : 0262072726
The 20th NBER Macroeconomics Annual, covering questions at the cutting edge of macroeconomics that are central to current policy debates.
Author : Alessandro Cantelmo
Publisher : International Monetary Fund
Page : 33 pages
File Size : 40,23 MB
Release : 2017-03-06
Category : Business & Economics
ISBN : 1475584784
In an estimated two-sector New-Keynesian model with durable and nondurable goods, an inverse relationship between sectoral labor mobility and the optimal weight the central bank should attach to durables inflation arises. The combination of nominal wage stickiness and limited labor mobility leads to a nonzero optimal weight for durables inflation even if durables prices were fully flexible. These results survive alternative calibrations and interestrate rules and point toward a non-negligible role of sectoral labor mobility for the conduct of monetary policy.