Showing 41 - 50 of 108
Persistent link: https://www.econbiz.de/10013424479
An inflation targeting central bank aims to stabilize the rate of inflation. But which 'inflation' should this be? Quarterly, annual, biennial? We analyze the effects on optimal monetary policy of increasing the period over which the inflation rate is defined. When inflation stabilization is the...
Persistent link: https://www.econbiz.de/10014115392
We develop a structural model of a small open economy with gradual exchange rate pass-through and endogenous inertia in inflation and output. We then estimate the model by matching the implied impulse responses with those obtained from a VAR model estimated on Swedish data. Although our model is...
Persistent link: https://www.econbiz.de/10014070831
This paper examine differences between risk-neutral and objective probability densities of future interest rates. The identification and quantification of these differences are important when risk-neutral densities (RNDs), such as option-implied RNDs, are used as indicators of actual beliefs of...
Persistent link: https://www.econbiz.de/10009635905
We construct and estimate a joint model of macroeconomic and yield curve dynamics. A small-scale rational expectations model describes the macroeconomy. Bond yields are affine functions of the state variables of the macromodel, and are derived assuming absence of arbitrage opportunities and a...
Persistent link: https://www.econbiz.de/10009639487
We show that microfounded DSGE models with nominal rigidities can be successful in replicating features of bond yield data, including sizeable term premia and volatile long-term yields, which have previously been considered puzzling in general equilibrium frameworks. At the same time, sample...
Persistent link: https://www.econbiz.de/10005570612
We show that, when private sector expectations are determined in line with adaptive learning, optimal policy responds persistently to cost-push shocks. The optimal response is stronger and more persistent, the higher is the initial level of perceived inflation persistence by the private sector....
Persistent link: https://www.econbiz.de/10005690548
What are the real and nominal implications of a green transition to a state with sustainable energy production, and how should monetary policy react during such transition? Using a New-Keynesian model with an energy and a goods sector, we show that a green transition requires the relative price...
Persistent link: https://www.econbiz.de/10014563899
Central banks around the world have implemented extensive measures to alleviate the effects of the corona pandemic on the economy. Many of the measures involve creating large volumes of new money. But how is money created and who ends up holding it? In this commentary, we explain how money is...
Persistent link: https://www.econbiz.de/10012497729
This paper examines a price-level target in a model with a forward-looking Calvo-Taylor Phillips curve. Contrary to conventional wisdom, it is found that price-level targeting leads to a better trade-off between inflation and output-gap variability than inflation targeting, when the central bank...
Persistent link: https://www.econbiz.de/10005423742