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Optimal monetary policy and the vintage-dependent price and wage Phillips curves: An international comparison

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  • DI BARTOLOMEO, Giovanni
  • SERPIERI, Carolina

Abstract

In this study, we compare the conduct of central banks across seven advanced economies by analyzing the relationship between observed and optimal monetary policies. We estimate the New Keynesian Phillips curves for prices and wages and use model-consistent welfare measures to conduct counterfactual analysis. What sets our approach apart is the focus on the impact of inertia on output gaps and price/wage dynamics, which we model using duration-dependent adjustments. Ignoring the effects of inertia on welfare and policies could result in a misleading and incomplete understanding of inflation dynamics. By incorporating this element into our analysis, we aim to identify common trends and specificities in central banks’ monetary policy conduct across different countries.

Suggested Citation

  • DI BARTOLOMEO, Giovanni & SERPIERI, Carolina, 2023. "Optimal monetary policy and the vintage-dependent price and wage Phillips curves: An international comparison," Working Papers 2023004, University of Antwerp, Faculty of Business and Economics.
    • Handle: RePEc:ant:wpaper:2023004
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    More about this item

    Keywords

    Duration-dependent adjustments; Intrinsic inflation persistence; DSGE models; Hybrid Phillips curves; Optimal policy;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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