2 edition of Optimal monetary policy in a model of overlapping price contracts found in the catalog.
Optimal monetary policy in a model of overlapping price contracts
Jeffrey C. Fuhrer
|Statement||by Jeffrey C. Fuhrer.|
|Series||Working paper -- no. 94-2., Working paper series (Federal Reserve Bank of Boston) -- no. 94-2.|
|Contributions||Federal Reserve Bank of Boston.|
|The Physical Object|
|Pagination||57 p. ;|
|Number of Pages||57|
interest rates, the determination of overlapping wage contracts, and uncovered interest parity in the foreign exchange market. The updated FRB/MCM has been used to evaluate three specific monetary policy . Full nominal price flexibility, nominal prices set one period in advance and Calvo-style staggered overlapping price contracts with a variety of indexation rules for constrained price setters are considered. For all price setting models, optimal monetary policy implements the Bailey-Friedman Optimal .
Monetary policy rests on the relationship between the rates of interest in an economy, that is the price at which money can be borrowed, and the total supply of money. Monetary policy uses File Size: KB. Asset Price Learning and Optimal Monetary Policy Caines, Colin and Fabian Winkler International Finance Discussion Papers Board of Governors of the Federal Reserve System Number August Please cite paper as: Caines, Colin and Fabian Winkler (). Asset Price Learning and Optimal Monetary Policy.
This paper discusses a rigorous empirical standard for monetary policy models. The motivation for this discussion is that, if one wishes to conduct welfare analysis, one must be reasonably confident that the model provides a good approximation to underlying consumer and firm behavior over the monetary policy . monetary policy, inﬂation and the business cycle. • RBC model: cannot even think about these issues! Real variables are completely separate from nominal variables (“monetary neutrality”, “classical dichotomy”). • Corollary: monetary policy has no eﬀect on any real variables. • Sticky prices break “monetary .
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Optimal monetary policy in a model of overlapping price contracts This study estimates a model of overlapping nominal price contracts over three distinct monetary policy regimes, testing the stability of the parameters in the model across regimes.
This study estimates a model of overlapping nominal price contracts over three distinct monetary policy regimes, testing the stability of the parameters in the model across regimes. Optimal Monetary Policy in a Model of Overlapping Price Contracts Jeffrey C. Fuhrer* Federal Reserve Bank of Boston July * Assistant Vice President and Economist, Federal.
Federal Reserve Bank of Boston Optimal Monetary Policy in a Model of Overlapping Price Contracts. the model thmt holds for the most recent monetary regime is used to compute the optimal policy frontier-the efficient combinations of output mud inflation vgrian’ces-and compared to actual policy Author: and Jeffrey C.
Fuhrer and Jeffrey C. Fuhrer. Optimal monetary policy in a model of overlapping price contracts Working Papers, Federal Reserve Bank of Boston View citations (3) Estimating the linear-quadratic inventory model.
Insights for optimal policy 1. Price stickiness and –nancial distortion may con⁄ict 2. Role for stabilizing –nancial premium (over and above in⁄ation and output gap) Lt = 1 2 2 6 6 6 6 4 " 1. For example, optimal monetary policy depends on the relative duration of wage and price contracts: the optimal rule induces greater variability in the more flexible nominal variable.
The welfare level under the optimal monetary policy rule provides a natural benchmark against which to measure the performance of alternative policy by: optimal monetary policy, developing the model-consistent objectives for policy, the notion of optimal commitment, and the instrument rules that can implement optimal policy.
What. In the absence of arbitrage opportunities, the forward contract price should be equal to the current price plus a.
Contract price. The cost of carry. Margin requirement. The price. The unconditional expectation of average household utility can be expressed in terms of the unconditional variances of the output gap, price inflation, and wage inflation.
Monetary policy cannot replicate the Pareto-optimal equilibrium that would occur under completely flexible wages and prices; that is, the model exhibits a tradeoff between stabilizing the output gap, price inflation.
Optimal monetary policy in a model of overlapping price contracts. [Boston]: Federal Reserve Bank of Boston,  (OCoLC) Material Type: Internet resource: Document Type: Book. In the ﬂgure, this set is determined by the two intersections with the 45oline. Other topics. In other macroeconomic topics, such as monetary economics, labor, ﬂscal policy, and asset pricing, the Solow model.
Optimal Monetary Policy in Closed versus Open Economies: An Integrated Approach. Our main result is that in this model, the optimal policy problem for the small open economy is. Mainstream writings on monetary policy typically focus on the goals that are assumed to be the goals of monetary policy makers.
Inflation targeting, employment, equilibration of the balance of payments, growth targets for monetary aggregates, the stabilization of exchange rates, GDP, or asset prices—these. Brock, W. and J. Scheinkman () 'Some remarks on monetary policy in an overlapping generations model', in: J.
Kareken and N. Wallace, eds., Models of monetary economies. Cited by: compute welfare-maximizing monetary policy rules, with commitment, in a stochastic environment, using exactly the approach as used in the recent literature on optimal monetary policy in open economy models with nominal rigidities.
Our model. some welfare analysis of monetary policy in chapters 7, 8 and 9. Chapter 10 augments the basic model with sticky wages in addition to sticky prices, following Erceg et al. Finally, the small open economy model File Size: 1MB. article is determining the optimum rate of tax on money (inflation tax) in an overlapping generation model that characterized the four sector economy.
Keywords: Inflation Tax, OLG Model, Fiscal policy, Monetary Policy INTRODUCTION Governments use fiscal policy. presents a model with overlapping labor contracts in which all labor contracts are made for two periods and in which at any one time half the firms are operating in the first year of a 2-year contract and the other half in the second year of a contract.
In this model monetary policy. optimal monetary policy in a simpler model than that presented here which does not embody rational expectations. derivation of the optimal monetary rule under discretion in Section 4, which includes a comparison of the two policy rules, and Section 5 concludes.
The model We start with a standard utility or loss function for the monetary. price adjustment in the SDP model, especially for those ﬁrms that 4Independently, Lie () studies numerically the optimal monetary policy in a New Keynesian model with stochastic menu costs and a monetary Cited by: of monetary policy.
Full nominal price flexibility, nominal prices set one period in advance and Calvo-style staggered overlapping price contracts with a variety of indexation rules for constrained price setters are considered. For all price setting models, optimal monetary policy implements the Bailey-Friedman Optimal.
Expectations play a key role in macroeconomics. The assumption of rational expectations has been recently relaxed by explicit models of forecasting and model updating.
rule Learning in macroeconomics Liquidity trap Monetary policy Multiple equilibria New Keynesian macroeconomics Overlapping contracts model .