منابع مشابه
Oil shocks and optimal monetary policy, April 2010
In practice, central banks have been confronted with a trade-o¤ between stabilising ination and output when dealing with rising oil prices. This contrasts with the result in the standard New Keynesian model that ensuring complete price stability is the optimal thing to do, even when an oil shock leads to large output drops. To reconcile this apparent contradiction, this paper investigates how ...
متن کاملMonetary Policy Response to Oil Price Shocks
How should monetary authorities react to an oil price shock? The New Keynesian literature has concluded that ensuring complete price stability is the optimal thing to do. In contrast, this paper argues that a meaningful trade-off between stabilizing inflation and the welfare relevant output gap arises in a distorted economy once one recognizes (i) that oil (energy) cannot be easily substituted ...
متن کاملIncomplete Markets, Idiosyncratic Shocks and Optimal Monetary Policy
A widespread result in monetary policy literature is that the price level should be stabilized and, as corollary, the nominal interest rate should vary with the Wicksellian determinants of the real interest rate. The present paper studies how this result is altered when the representative agent assumption is abandoned and financial wealth heterogeneity across households is introduced. I derive ...
متن کاملMonetary Policy and Credit Supply Shocks
The depth and duration of the 2007–09 recession serves as a powerful reminder of the real consequences of financial shocks. Although channels through which disruptions in financial markets can affect economic activity are relatively well understood from a theoretical perspective, assessing their quantitative implications for the real economy remains a considerable challenge. This paper examines...
متن کامل1 Optimal Monetary Policy
We re-examine optimal monetary policy when lump-sum taxes are unavailable. Under commitment, we show that, with alternative utility functions to that considered in Nicolini’s related analysis, the direction of the incentive to cheat may depend on the initial level of government debt, with low debt creating an incentive towards surprise deflation, but high debt the reverse. Under discretion, we ...
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ژورنال
عنوان ژورنال: Macroeconomic Dynamics
سال: 2012
ISSN: 1365-1005,1469-8056
DOI: 10.1017/s1365100510000106