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Author : Torben M. Andersen
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (18 download)
Download or read book Nominal Rigidities and the Optimal Rate of Inflation written by Torben M. Andersen and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Eytan Sheshinski
Publisher : MIT Press
ISBN 13 : 9780262193320
Total Pages : 546 pages
Book Rating : 4.1/5 (933 download)
Download or read book Optimal Pricing, Inflation, and the Cost of Price Adjustment written by Eytan Sheshinski and published by MIT Press. This book was released on 1993 with total page 546 pages. Available in PDF, EPUB and Kindle. Book excerpt: These collected articles constitute what is perhaps the definitive study of pricing models under inflation, providing a solid basis for further research on this elusive question. What are the real effects of inflation? These collected articles constitute what is perhaps the definitive study of pricing models under inflation, providing a solid basis for further research on this elusive question. Covering a broad range of theory and applications by well-known microeconomists, the eighteen contributions evaluate the effects of inflation on aggregate output and on welfare and reveal the scope of recent efforts to explicitly incorporate frictions in economic models. A basic building block common to most of the essays in this volume is the observation that individual firms change nominal prices intermittently. The frequency and size of nominal price changes are influenced by the cost of price adjustment and changes in the economic environment, production costs, market demand, market structure, and most important, inflation. Thus the degree of nominal rigidity is influenced by the economic environment, and in a dynamic context. Two introductory essays survey the empirical studies of pricing policies by individual firms and the theoretical efforts to integrate the nominal rigidities at the micro level into macro relationships. The essays that follow treat the general problem of optimal dynamic adjustment in the presence of convex costs of adjustment, include applications of the inventory models to the case of nominal price adjustment by an individual firm, address the question of aggregation, introduce active search by consumers, and provide empirical analysis of nominal price rigidities.
Author : David M. Arseneau
Publisher :
ISBN 13 :
Total Pages : 48 pages
Book Rating : 4.E/5 ( download)
Download or read book Optimal Inflation in an Open Economy with Imperfect Competition written by David M. Arseneau and published by . This book was released on 2004 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Mirko Abbritti
Publisher : International Monetary Fund
ISBN 13 : 1513583980
Total Pages : 49 pages
Book Rating : 4.5/5 (135 download)
Download or read book Endogenous Growth, Downward Wage Rigidities and Optimal Inflation written by Mirko Abbritti and published by International Monetary Fund. This book was released on 2021-08-06 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: Standard New Keynesian (NK) models feature an optimal inflation target well below two percent, limited welfare losses from business cycle fluctuations and long-term monetary neutrality. We develop a NK framework with labour market frictions, endogenous productivity and downward wage rigidity (DWR) which challenges these results. The model features a non-vertical long-run Phillips curve between inflation and unemployment and a trade-off between price distortions and output hysteresis that change the welfare-maximizing inflation level. For a plausible set of parameters, the optimal inflation target is in excess of two percent, a target value commonly used across central banks. Deviations from the optimal target carry welfare costs multiple times higher than in traditional NK models. The main reason is that endogenous growth and DWR generate asymmetric and hysteresis effects on unemployment and output. Price level targeting or a Taylor-rule responding to the unemployment rate can handle better the asymmetric and hysteresis effects in our model and deliver significant welfare gains. Our results are robust to the inclusion of the effective lower bound on the monetary policy interest rate.
Author : Roberto Billi
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (899 download)
Download or read book The Optimal Inflation Buffer with a Zero Bound on Nominal Interest Rates written by Roberto Billi and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Stephanie Schmitt-Grohé
Publisher :
ISBN 13 :
Total Pages : 42 pages
Book Rating : 4.X/5 (6 download)
Download or read book Optimal Fiscal and Monetary Policy Under Sticky Prices written by Stephanie Schmitt-Grohé and published by . This book was released on 2001 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies optimal .scal and monetary policy under sticky product prices. The theoretical framework is a stochastic production economy without capital. The government finances an exogenous stream of purchases by levying distortionary income taxes, printing money, and issuing one-period nominally risk-free bonds. The main findings of the paper are: First, for a miniscule degree of price stickiness (i.e., many times below available empirical estimates)the optimal volatility of in.ation is near zero. This result stands in stark contrast with the high volatility of inflation implied by the Ramsey allocation when prices are flexible. The finding is in line with a recent body of work on optimal monetary policy under nominal rigidities that ignores the role of optimal fiscal policy. Second, even small deviations from full price flexibility induce near random walk behavior in government debt and tax rates, as in economies with real non-state-contingent debt only. Finally, sluggish price adjustment raises the average nominal interest rate above the one called for by the Friedman rule.
Author : Olivier Coibion
Publisher :
ISBN 13 :
Total Pages : 65 pages
Book Rating : 4.:/5 (642 download)
Download or read book The Optimal Inflation Rate in New Keynesian Models written by Olivier Coibion and published by . This book was released on 2010 with total page 65 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effects of positive steady-state inflation in New Keynesian models subject to the zero bound on interest rates. We derive the utility-based welfare loss function taking into account the effects of positive steady-state inflation and show that steady-state inflation affects welfare through three distinct channels: steady-state effects, the magnitude of the coefficients in the utility-function approximation, and the dynamics of the model. We solve for the optimal level of inflation in the model and find that, for plausible calibrations, the optimal inflation rate is low, less than two percent, even after considering a variety of extensions, including price indexation, endogenous price stickiness, capital formation, model-uncertainty, and downward nominal wage rigidities. In our models, price level targeting delivers large welfare gains and a very low optimal inflation rate consistent with price stability -- National Bureau of Economic Research web site.
Author : United States. Congress. Senate. Advisory Commission to Study the Consumer Price Index
Publisher :
ISBN 13 :
Total Pages : 212 pages
Book Rating : 4.3/5 (91 download)
Download or read book Toward a More Accurate Measure of the Cost of Living written by United States. Congress. Senate. Advisory Commission to Study the Consumer Price Index and published by . This book was released on 1996 with total page 212 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Niloufar Entekhabi
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Technical Change, Wage and Price Dispersion, and the Optimal Rate of Inflation written by Niloufar Entekhabi and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper brings the elements of growth to the standard New Keynesian model to analyze the optimal rate of inflation. To our knowledge, this is the first theoretical attempt to consider the effects of growth in the determination of optimal monetary policies. With both elements of price and wage rigidities, inflation creates distortions due to wage and price dispersions and due to its effects on monopolistic mark-ups by price and wage setters. The choice of the optimal inflation rate balances these distortions at the margin. The paper first characterizes these tradeoffs in the steady-state version of the model and finds that, for a wide range of parameter values, the optimal rate of inflation is negative. When the monetary policy is committed to adjust nominal interest rates to ensure its objective of price stability, it might target a deflation rate. This is due to the fact that the mean of inflation is affected by shocks, and on average, this mean is approaching zero. The welfare analysis then reveals that real growth decreases the welfare cost of inflation.
Author : Jordi Galí
Publisher :
ISBN 13 :
Total Pages : 62 pages
Book Rating : 4.X/5 (6 download)
Download or read book New Perspectives on Monetary Policy, Inflation and the Business Cycle written by Jordi Galí and published by . This book was released on 2002 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: The present paper provides an overview of recent developments in the analysis of monetary policy in the presence of nominal rigidities. The paper emphasizes the existence of several dimensions in which the recent literature provides a new perspective on the linkages among monetary policy, inflation, and the business cycle. It is argued that the adoption of an explicitly optimizing, general equilibrium framework has not been superfluous; on the contrary, it has yielded many insights which, by their nature, could hardly have been obtained with earlier non-optimizing models.
Author : Woon Gyu Choi
Publisher : International Monetary Fund
ISBN 13 :
Total Pages : 40 pages
Book Rating : 4.:/5 (318 download)
Download or read book Optimal Monetary Policy in a Small Open Economy with Habit Formation and Nominal Rigidities written by Woon Gyu Choi and published by International Monetary Fund. This book was released on 2003 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Introducing habit formation into an open economy macroeconomic model with price stickiness, we examine the characteristics of an optimal monetary policy. We find that, first, the optimal policy rule entails interest rate smoothing and responds to the lagged values of the foreign interest rate and domestic technology shocks as well as their current values. Second, habit formation enriches the dynamics of the economy with a persistent, hump-shaped response of consumption to shocks. Finally, when habit formation does matter, the optimal policy rule achieves a greater welfare improvement over alternative policy rules by achieving lower macroeconomic variability.
Author : Ben S. Bernanke
Publisher : University of Chicago Press
ISBN 13 : 0226044734
Total Pages : 469 pages
Book Rating : 4.2/5 (26 download)
Download or read book The Inflation-Targeting Debate written by Ben S. Bernanke and published by University of Chicago Press. This book was released on 2007-11-01 with total page 469 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the past fifteen years, a significant number of industrialized and middle-income countries have adopted inflation targeting as a framework for monetary policymaking. As the name suggests, in such inflation-targeting regimes, the central bank is responsible for achieving a publicly announced target for the inflation rate. While the objective of controlling inflation enjoys wide support among both academic experts and policymakers, and while the countries that have followed this model have generally experienced good macroeconomic outcomes, many important questions about inflation targeting remain. In Inflation Targeting, a distinguished group of contributors explores the many underexamined dimensions of inflation targeting—its potential, its successes, and its limitations—from both a theoretical and an empirical standpoint, and for both developed and emerging economies. The volume opens with a discussion of the optimal formulation of inflation-targeting policy and continues with a debate about the desirability of such a model for the United States. The concluding chapters discuss the special problems of inflation targeting in emerging markets, including the Czech Republic, Poland, and Hungary.
Author : Pierpaolo Benigno
Publisher :
ISBN 13 :
Total Pages : 52 pages
Book Rating : 4.:/5 (319 download)
Download or read book Inflation Persistence and Optimal Monetary Policy in the Euro Area written by Pierpaolo Benigno and published by . This book was released on 2002 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: Se presentan evidencias de la existencia de heterogeneidades en la dinámica de inflación en los países del área euro.
Author : Jordi Galí
Publisher : Princeton University Press
ISBN 13 : 1400866278
Total Pages : 295 pages
Book Rating : 4.4/5 (8 download)
Download or read book Monetary Policy, Inflation, and the Business Cycle written by Jordi Galí and published by Princeton University Press. This book was released on 2015-06-09 with total page 295 pages. Available in PDF, EPUB and Kindle. Book excerpt: The classic introduction to the New Keynesian economic model This revised second edition of Monetary Policy, Inflation, and the Business Cycle provides a rigorous graduate-level introduction to the New Keynesian framework and its applications to monetary policy. The New Keynesian framework is the workhorse for the analysis of monetary policy and its implications for inflation, economic fluctuations, and welfare. A backbone of the new generation of medium-scale models under development at major central banks and international policy institutions, the framework provides the theoretical underpinnings for the price stability–oriented strategies adopted by most central banks in the industrialized world. Using a canonical version of the New Keynesian model as a reference, Jordi Galí explores various issues pertaining to monetary policy's design, including optimal monetary policy and the desirability of simple policy rules. He analyzes several extensions of the baseline model, allowing for cost-push shocks, nominal wage rigidities, and open economy factors. In each case, the effects on monetary policy are addressed, with emphasis on the desirability of inflation-targeting policies. New material includes the zero lower bound on nominal interest rates and an analysis of unemployment’s significance for monetary policy. The most up-to-date introduction to the New Keynesian framework available A single benchmark model used throughout New materials and exercises included An ideal resource for graduate students, researchers, and market analysts
Author : Daisuke Ikeda
Publisher :
ISBN 13 :
Total Pages : 34 pages
Book Rating : 4.:/5 (13 download)
Download or read book Optimal Inflation Rates with the Trending Relative Price of Investment written by Daisuke Ikeda and published by . This book was released on 2014 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: I study the effect of the trending relative price of investment on the optimal target rate of inflation. The price of investment has a decreasing trend relative to that of consumption because of investment-specific technological progress. If the prices of investment goods are sticky, a benevolent planner puts weight on stabilizing those prices, which works to raise the optimal target rate of inflation in terms of the price of consumption. The Bayesian estimation of a dynamic general equilibrium model that features the trending relative price of investment reveals a high degree of nominal rigidity in the prices of investment goods. The resulting optimal target rate of inflation is significantly positive with a median of 1.5 percent. The result is robust to the extended model in which the prices of some categories of investment goods are flexible.
Author : Kenneth S. Rogoff
Publisher : MIT Press
ISBN 13 : 0262072726
Total Pages : 479 pages
Book Rating : 4.2/5 (62 download)
Download or read book NBER Macroeconomics Annual 2005 written by Kenneth S. Rogoff and published by MIT Press. This book was released on 2006-04 with total page 479 pages. Available in PDF, EPUB and Kindle. Book excerpt: The 20th NBER Macroeconomics Annual, covering questions at the cutting edge of macroeconomics that are central to current policy debates.
Author : Xuanyang Zhang
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (19 download)
Download or read book Essays on Trend Inflation, Nominal Rigidity, and Optimal Monetary Policy written by Xuanyang Zhang and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
