A Few Model-Based Answers to Monetary Policy Questions in the United States and the Euro-Area
نویسنده
چکیده
This paper estimates a sticky-information general-equilibrium model for the United States and the Euro-area, and uses it as a laboratory to answer monetary policy questions. The rst set of questions is positive and concerns describing past monetary policy: what policy rule has best described policy? What has been the role of stabilization policy? How large have policy errors been? What is the role of policy announcements? What is the result of having interest rates move gradually? The second set of questions is normative and concerns the design of optimal policy: what is the optimal Taylor rule? What is the optimal elastic price-level standard? What rule maximizes social welfare? How does parameter uncertainty a¤ect optimal policy? The answers to these questions suggest a few lessons for applied monetary policy. JEL classi cation: E30, E10 I am grateful to Tiago Berriel for excellent research assistance. Contact: [email protected].
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