We study optimal monetary policy in an analytically tractable New Key-nesian DSGE-model with an emission externality. Empirically, emissions are strongly pro-cyclical and output in the flexible price equilibrium overreacts to productivity shocks, relative to the efficient allocation. At the same...

We study optimal monetary policy in an analytically tractable New Key-nesian DSGE-model with an emission externality. Empirically, emissions are strongly pro-cyclical and output in the flexible price equilibrium overreacts to productivity shocks, relative to the efficient allocation. At the same...

The main purpose of this research paper is to determine whether Nominal GDP targeting as a monetary policy regime would be superior to Inflation targeting in minimising the South African Reserve Bank's loss function. This is done by algebraically deriving the necessary conditions for Nominal GDP...