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Time Consistency of Fiscal and Monetary Policy : A Solution

Persson, Mats; Persson, Torsten; Svensson, Lars E. O. - 2021

This paper demonstrates how time consistency of the Ramsey policy - the optimal fiscal and monetary policy under commitment - can be achieved. Each government should leave its successor with a unique maturity structure for the nominal and indexed debt, such that the marginal benefit of a...

Persistent link: https://www.econbiz.de/10013232768

Evaluating Monetary Policy

Svensson, Lars E. O. - 2010

order to stabilize the real economy. A modified Taylor curve, the forecast Taylor curve, showing the tradeoff between the … achieved an efficient stabilization of both inflation and the real economy and what relative weight on the stability of … inflation and the real economy has effectively been applied. Ex ante evaluation may be more relevant than evaluation ex post …

Persistent link: https://www.econbiz.de/10013150832

Anticipated Alternative Instrument-Rate Paths in Policy Simulations

Laseen, Stefan - 2010

include among the predetermined variables (the quot;statequot; of the economy) the vector of nonzero means of future shocks to …

Persistent link: https://www.econbiz.de/10012757526

Monetary Policy Trade-Offs in an Estimated Open-Economy DSGE Model

Adolfson, Malin - 2010

open economy. The main results are, first, that the transmission of shocks depends substantially on the conduct of monetary …

Persistent link: https://www.econbiz.de/10012758144

Optimal Monetary Policy in an Operational Medium-Sized DSGE Model

Adolfson, Malin - 2010

We show how to construct optimal policy projections in Ramses, the Riksbank's open-economy medium-sized DSGE model for … transmission of shocks. Finally, we use the model to assess the recent Great Recession in the world economy and how its impact on …

Persistent link: https://www.econbiz.de/10012759208

Current Account Dynamics and Monetary Policy

Ferrero, Andrea - 2010

We explore the implications of current account adjustment for monetary policy within a simple two-country DSGE model. Our framework nests Obstfeld and Rogoff's (2005) static model of exchange rate responsiveness to current account reversals. It extends this approach by endogenizing the dynamic...

Persistent link: https://www.econbiz.de/10012759418

Optimal Monetary Policy Under Uncertainty in DSGE Models : A Markov Jump-Linear-Quadratic Approach

Svensson, Lars E. O. - 2010

We study the design of optimal monetary policy under uncertainty in a dynamic stochastic general equilibrium models. We use a Markov jump-linear-quadratic (MJLQ) approach to study policy design, approximating the uncertainty by different discrete modes in a Markov chain, and by taking...

Persistent link: https://www.econbiz.de/10012759442

Why Exchange Rate Bands? Monetary Independence in Spite of Fixed Exchange Rates

Svensson, Lars E. O. - 2010

The paper argues that the reason real world fixed exchange rate regimes usually have finite bands instead of completely fixed exchange rates between realignments is that exchange rate bands, counter to the textbook result, give central banks some monetary independence, even with free...

Persistent link: https://www.econbiz.de/10012763458

Monetary Policy Strategies for the Federal Reserve

Svensson, Lars E. O. - 2020

The general monetary policy strategy of “forecast targeting” allows the Federal Reserve to respond flexibly to all relevant information in achieving its dual mandate of maximum employment and price stability. In contrast, a simple “instrument” rule such as a Taylor-type rule restricts...

Persistent link: https://www.econbiz.de/10012843647

Forward Guidance

Svensson, Lars E. O. - 2014

Forward guidance about future policy settings, in the form of a published policy-rate path, has for many years been a natural part of normal monetary policy for several central banks, including the Reserve Bank of New Zealand and the Swedish Riksbank. More recently, the Federal Reserve has...

Persistent link: https://www.econbiz.de/10013039629