NBER WORKING PAPER SERIES OPTIMAL SIMPLE AND IMPLEMENTABLE MONETARY AND FISCAL RULES
... Specifically, this paper characterizes monetary and fiscal policy rules that are optimal within a family of implementable, simple rules in a calibrated model of the business cycle. In the model economy, business cycles are driven by stochastic variations in the level of total factor productivity and ...
... Specifically, this paper characterizes monetary and fiscal policy rules that are optimal within a family of implementable, simple rules in a calibrated model of the business cycle. In the model economy, business cycles are driven by stochastic variations in the level of total factor productivity and ...
Aggregate Supply
... curve, we first consider the pricing decisions of individual firms and then add together the decisions of many firms to explain the behavior of the economy as a whole. Notice that this model encourages us to depart from the assumption of perfect competition, which we have used since Chapter 3. Perfe ...
... curve, we first consider the pricing decisions of individual firms and then add together the decisions of many firms to explain the behavior of the economy as a whole. Notice that this model encourages us to depart from the assumption of perfect competition, which we have used since Chapter 3. Perfe ...
Inflation targeting framework and interest Rates
... prime rate. They found that the Fed moved the fund rate less than one-for-one during the period 1960-1979 violating the Taylor principle. However, a study by Perez (2001) found out that when the Fed’s reaction function is re-estimated using real time data, the co-efficient on inflation is greater th ...
... prime rate. They found that the Fed moved the fund rate less than one-for-one during the period 1960-1979 violating the Taylor principle. However, a study by Perez (2001) found out that when the Fed’s reaction function is re-estimated using real time data, the co-efficient on inflation is greater th ...
NBER WORKING PAPER SERIES THE CONDUCT OF DOMESTIC ICY Robert J. Gordon
... 3Estimates of the Okun's Law relationship between the U. S. unemployment rate and the output ratio are contained in Cordon (1982a, p. 94). The relationship between the demographically weighted unemployment rate and the output ratio remains completely stable over the 1954—80 period. The natural aggre ...
... 3Estimates of the Okun's Law relationship between the U. S. unemployment rate and the output ratio are contained in Cordon (1982a, p. 94). The relationship between the demographically weighted unemployment rate and the output ratio remains completely stable over the 1954—80 period. The natural aggre ...
Monetary policy trade-offs and forward guidance
... breached, would mean that the guidance would no longer apply: first, if in the MPC’s view, it is more likely than not that CPI inflation 18 to 24 months ahead will be at least half a percentage point above the 2% target; and second, if medium-term inflation expectations no longer remain sufficiently ...
... breached, would mean that the guidance would no longer apply: first, if in the MPC’s view, it is more likely than not that CPI inflation 18 to 24 months ahead will be at least half a percentage point above the 2% target; and second, if medium-term inflation expectations no longer remain sufficiently ...
Supporting Paper A2 A review of economic developments and monetary policy
... than the developed-country average2 of around 5 percent for the period. The gap is about the same in real terms,3 and did not substantially narrow over the review period. Supporting paper A4 discusses some possible reasons why New Zealand real interest rates remain so persistently high. Compared t ...
... than the developed-country average2 of around 5 percent for the period. The gap is about the same in real terms,3 and did not substantially narrow over the review period. Supporting paper A4 discusses some possible reasons why New Zealand real interest rates remain so persistently high. Compared t ...
CH_14_13th
... • Here, a shift to an expansionary monetary policy is shown. • Assume the Fed expands the supply of money by buying bonds… which will increase bank reserves … pushing real interest rates down … which leads to increased investment and consumption … a depreciation of the dollar (leading to increased n ...
... • Here, a shift to an expansionary monetary policy is shown. • Assume the Fed expands the supply of money by buying bonds… which will increase bank reserves … pushing real interest rates down … which leads to increased investment and consumption … a depreciation of the dollar (leading to increased n ...
the Lecture Notes
... – Eventually inflation reality sets in and workers expect a continued higher level of price increases and push for wage demands in line with inflation – When this occurs, employers no longer find it profitable to retain the high levels of output and the economy reverts to full employment, YFE – Once ...
... – Eventually inflation reality sets in and workers expect a continued higher level of price increases and push for wage demands in line with inflation – When this occurs, employers no longer find it profitable to retain the high levels of output and the economy reverts to full employment, YFE – Once ...
Economic Review, 2nd Quarter, 1999
... on the part of the Federal Reserve. Many analysts have noted that the Federal Reserve has a tendency to smooth movements of the funds rate (Goodfriend; Orphanides; Clarida, Gali, and Gertler 1998). Concern about the stability of financial markets may lead the Federal Reserve to smooth funds rate cha ...
... on the part of the Federal Reserve. Many analysts have noted that the Federal Reserve has a tendency to smooth movements of the funds rate (Goodfriend; Orphanides; Clarida, Gali, and Gertler 1998). Concern about the stability of financial markets may lead the Federal Reserve to smooth funds rate cha ...
Government Maturity Structure Shocks Alexandre Corhay Howard Kung Gonzalo Morales
... Fiscal (PM/AF). Lastly, we solve the model using global projection methods to capture bond risk premia and account for the ZLB constraint jointly with rational expectations in an extension of the benchmark model. In this framework, zero cost shocks (i.e., holding total market value of debt constant ...
... Fiscal (PM/AF). Lastly, we solve the model using global projection methods to capture bond risk premia and account for the ZLB constraint jointly with rational expectations in an extension of the benchmark model. In this framework, zero cost shocks (i.e., holding total market value of debt constant ...
CHAPTER 16: Monetary Policy
... Why Did Homebuilder Toll Brothers, Inc. Prosper during the 2001 Recession? ...
... Why Did Homebuilder Toll Brothers, Inc. Prosper during the 2001 Recession? ...
Currency Strategy 2017-01
... economy is on a mend, though slack still remains. We expect CAD to be supported by benign risk appetite, a correction of current undervaluation and growth accelerating due to its extensive connections to the US economy. Main risks are the possibility of higher tariffs on export to the US and the cur ...
... economy is on a mend, though slack still remains. We expect CAD to be supported by benign risk appetite, a correction of current undervaluation and growth accelerating due to its extensive connections to the US economy. Main risks are the possibility of higher tariffs on export to the US and the cur ...
This PDF is a selection from an out-of-print volume from... of Economic Research Volume Title: Rational Expectations and Economic Policy
... variables-output, employment, and unemployment-and the rate of inflation. Full development of these structural assumptions is a large undertaking and would be necessary for a complete understanding of business cycles, but only a couple of assumptions are critical for deriving the implications of the ...
... variables-output, employment, and unemployment-and the rate of inflation. Full development of these structural assumptions is a large undertaking and would be necessary for a complete understanding of business cycles, but only a couple of assumptions are critical for deriving the implications of the ...
6The Short-run Model for the Closed Economy
... rule must be positive.4 Otherwise falling inflation will cause the real interest rate to rise, exacerbating the initial recession. The stronger monetary policy reacts to falling inflation (the greater the value of h), the flatter is the aggregate demand curve, and the faster is the convergence of o ...
... rule must be positive.4 Otherwise falling inflation will cause the real interest rate to rise, exacerbating the initial recession. The stronger monetary policy reacts to falling inflation (the greater the value of h), the flatter is the aggregate demand curve, and the faster is the convergence of o ...
Taylor Rules, McCallum Rules and the Term Structure of Interest Rates
... that a factor model of the term structure that also imposes no-arbitrage conditions, can provide a better empirical model of the term structure than a model based on unobserved factors or latent variables alone. Estrella and Mishkin (1997), Evans and Marshall (1998) and (2001), also provide evidence ...
... that a factor model of the term structure that also imposes no-arbitrage conditions, can provide a better empirical model of the term structure than a model based on unobserved factors or latent variables alone. Estrella and Mishkin (1997), Evans and Marshall (1998) and (2001), also provide evidence ...
Tracking the Efficient Real Interest Rate
... each different policy specification. We then estimate each of these models with Bayesian methods and compare their fit using marginal data densities.3 This criterion produces a ranking of the different models, as well as a quantitative measure of their relative ability to fit the data. Importantly, ...
... each different policy specification. We then estimate each of these models with Bayesian methods and compare their fit using marginal data densities.3 This criterion produces a ranking of the different models, as well as a quantitative measure of their relative ability to fit the data. Importantly, ...
DP2007/11 Credit constraints and housing markets in New Zealand Andrew Coleman
... over different stages of their lives. The agents differ by age and income, and face realistic credit constraints. The solution of the model is a set of prices that clear the goods and housing markets, and an accompanying allocation of property and goods to different agents. These prices are used to ...
... over different stages of their lives. The agents differ by age and income, and face realistic credit constraints. The solution of the model is a set of prices that clear the goods and housing markets, and an accompanying allocation of property and goods to different agents. These prices are used to ...
Inflation Targeting with a backward Bending Phillips Curve
... Analytically, the key feature of Tobin’s neo-Keynesian Phillips curve is that the coefficient of inflation expectations in equation (3.1) is less than unity (λ < 1). That means incorporation of inflation expectations into nominal wage-setting is less than complete, and it is this rather than the for ...
... Analytically, the key feature of Tobin’s neo-Keynesian Phillips curve is that the coefficient of inflation expectations in equation (3.1) is less than unity (λ < 1). That means incorporation of inflation expectations into nominal wage-setting is less than complete, and it is this rather than the for ...