Robust Monetary Policy With Imperfect Knowledge

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Robust Monetary Policy With Imperfect Knowledge

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Author : Athanasios Orphanides
language : en
Publisher:
Release Date : 2007

Robust Monetary Policy With Imperfect Knowledge written by Athanasios Orphanides and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with Monetary policy categories.

We examine the performance and robustness properties of monetary policy rules in an estimated macroeconomic model in which the economy undergoes structural change andwhere private agents and the central bank possess imperfect knowledge about the true structure of the economy. Policymakers follow an interest rate rule aiming to maintain price stability and to minimize fluctuations of unemployment around its natural rate but areuncertain about the economy's natural rates of interest and unemployment and how private agents form expectations. In particular, we consider two models of expectations formation :rational expectations and learning. We show that in this environment the ability to stabilize the real side of the economy is significantly reduced relative to an economy under rational expectations with perfect knowledge. Furthermore, policies that would be optimal under perfect knowledge can perform very poorly if knowledge is imperfect. Efficient policies that take account of private learning and misperceptions of natural rates call for greater policy inertia, a more aggressive response to inflation, and a smaller response to the perceived unemployment gap than would be optimal if everyone had perfect knowledge of the economy. We show that such policies are quite robust to potential misspecification of private sector learning and the magnitude of variation in natural rates.

Monetary Policy With Imperfect Knowledge

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Author : Athanasios Orphanides
language : en
Publisher:
Release Date : 2005

Monetary Policy With Imperfect Knowledge written by Athanasios Orphanides and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Monetary policy categories.

We examine the performance and robustness of monetary policy rules when the central bank and the public have imperfect knowledge of the economy and continuously update their estimates of model parameters. We find that versions of the Taylor rule calibrated to perform well under rational expectations with perfect knowledge perform very poorly when agents are learning and the central bank faces uncertainty regarding natural rates. In contrast, difference rules, in which the change in the interest rate is determined by the inflation rate and the change in the unemployment rate, perform well when knowledge is both perfect and imperfect.

Communication Of Central Bank Thinking And Inflation Dynamics

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Author : Man-Keung Tang
language : en
Publisher: International Monetary Fund
Release Date : 2011-08-01

Communication Of Central Bank Thinking And Inflation Dynamics written by Man-Keung Tang 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 2011-08-01 with Business & Economics categories.

This paper studies the role of central bank communication of its economic assessment in shaping inflation dynamics. Imperfect information about the central bank's assessment - or the basis for monetary policy decisions - could complicate the private sector's learning about its policy response function. We show how clear central bank communication, which facilitates agents' understanding of policy reasoning, could bring about less volatile inflation and interest rate dynamics, and afford the authorities with greater policy flexibility. We then estimate a simple monetary model to fit the Mexican economy, and use the suggested paramters to illustrate the model's quantitative implications in scenarios where the timing, nature and persistence of shocks are uncertain.

Long Run Growth And Short Run Stabilization

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Author : The late Lawrence R. Klein
language : en
Publisher: Edward Elgar Publishing
Release Date : 2006

Long Run Growth And Short Run Stabilization written by The late Lawrence R. Klein 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 2006 with Business & Economics categories.

There is much confusion in the economics literature on wage determination and the employment-inflation trade-off. Few model builders pay as much careful attention to the definition and meaning of long-run concepts as did Albert Ando. Expanding on years of painstaking work by Ando, the contributors elaborate on the main issues of economic analysis and policies that concerned him.

Brookings Papers On Economic Activity Fall 2009

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Author : David H. Romer
language : en
Publisher: Brookings Institution Press
Release Date : 2010-07-01

Brookings Papers On Economic Activity Fall 2009 written by David H. Romer and has been published by Brookings Institution Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-07-01 with Political Science categories.

Brookings Papers on Economic Activity (BPEA) provides academic and business economists, government officials, and members of the financial and business communities with timely research on current economic issues. Contents: Editors' Summary Heeding Daedalus: Optimal Inflation and the Zero Lower Bound By John C. Williams The Age of Reason: Financial Decisions over the Life Cycle and Implications for Regulation By Sumit Agarwal, John C. Driscoll, and Xavier Gabaix Interpreting the Unconventional U.S. Monetary Policy of 2007-09 By Ricardo Reis By How Much Does GDP Rise If the Government Buys More Output? By Robert E. Hall When the North Last Headed South: Revisiting the 2930s By Carmen M. Reinhart and Vincent R. Reinhart

Monetary Policy Under Inflation Targeting

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Author : Frederic S. Mishkin
language : en
Publisher:
Release Date : 2007

Monetary Policy Under Inflation Targeting written by Frederic S. Mishkin and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with Anti-inflationary policies categories.

The Great Inflation

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Author : Michael D. Bordo
language : en
Publisher: University of Chicago Press
Release Date : 2013-06-28

The Great Inflation written by Michael D. Bordo and has been published by University of Chicago Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-06-28 with Business & Economics categories.

Controlling inflation is among the most important objectives of economic policy. By maintaining price stability, policy makers are able to reduce uncertainty, improve price-monitoring mechanisms, and facilitate more efficient planning and allocation of resources, thereby raising productivity. This volume focuses on understanding the causes of the Great Inflation of the 1970s and ’80s, which saw rising inflation in many nations, and which propelled interest rates across the developing world into the double digits. In the decades since, the immediate cause of the period’s rise in inflation has been the subject of considerable debate. Among the areas of contention are the role of monetary policy in driving inflation and the implications this had both for policy design and for evaluating the performance of those who set the policy. Here, contributors map monetary policy from the 1960s to the present, shedding light on the ways in which the lessons of the Great Inflation were absorbed and applied to today’s global and increasingly complex economic environment.

Inflation Targeting Under Imperfect Knowledge

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Author : Athanasios Orphanides
language : en
Publisher:
Release Date : 2006

Inflation Targeting Under Imperfect Knowledge written by Athanasios Orphanides and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Anti-inflationary policies categories.

Nber International Seminar On Macroeconomics 2004

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Author : Richard H. Clarida
language : en
Publisher: MIT Press
Release Date : 2006

Nber International Seminar On Macroeconomics 2004 written by Richard H. Clarida and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Business & Economics categories.

Leading American and European economists discuss monetary and fiscal policy from a global macroeconomic perspective and analyze the implications of European integration; cutting-edge research presented in a companion volume to the NBER Macroeconomics Annual.

Nber Macroeconomics Annual 2005

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Author : Kenneth S. Rogoff
language : en
Publisher: MIT Press
Release Date : 2006

Nber Macroeconomics Annual 2005 written by Kenneth S. Rogoff and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Business & Economics categories.

The 20th NBER Macroeconomics Annual, covering questions at the cutting edge of macroeconomics that are central to current policy debates.