A Practical Interest Rate Rule Working for the Optimal Monetary Policy in a Quasi-Optimal Way : An Introduction to Nri Targeting
It is well known that the Fed can operate the optimal monetary policy if the Fed is able to trace the Natural-Rate-of-Interest (NRI) successfully. In this sense, it has been wondered if there could be a certain way practically available for the Fed to get it done. It is shown that, based on NRI targeting instead of inflation targeting, the Fed can always operate the optimal monetary policy in a quasi-optimal way thanks to the role of unintended unanticipated monetary policy shocks. Furthermore, when the Fed follows NRI targeting, it turns out that the real interest rate channel is well functioning during the process of the Fed's responding to technology shocks and abrupt changes of NRI. It also turns out that it comes from the fact that real and nominal interest rates are all mainly determined by the Fed's NRI targeting
Year of publication: |
[2022]
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---|---|
Authors: | SUH, Jeong Eui |
Publisher: |
[S.l.] : SSRN |
Subject: | Geldpolitik | Monetary policy | Regelbindung versus Diskretion | Rules versus discretion | Zinspolitik | Interest rate policy | Theorie | Theory | Inflationssteuerung | Inflation targeting | Taylor-Regel | Taylor rule |
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