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The Science of Monetary Policy: A New Keynesian Perspective

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Author Info

  • Clarida, R.
  • Gali, J.
  • Gertler, M.

Abstract

The paper reviews the recent literature on monetary policy rules. We exposit the monetary policy design problem within a simple baseline theoretical framework. We then consider the implications of adding various real world complications. Among other things, we show that the optimal policy implicitly incorporates inflation targeting. We also characterize the gains from making a credible commitment to fight inflation. In contrast to conventional wisdom, we show that gains from commitment may emerge even if the central bank is not trying to inadvisedly push output above its natural level. We also consider the implications of frictions such as imperfect information.

(This abstract was borrowed from another version of this item.)

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File URL: http://econ.as.nyu.edu/docs/IO/9186/RR99-13.PDF
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Bibliographic Info

Paper provided by C.V. Starr Center for Applied Economics, New York University in its series Working Papers with number 99-13.

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Length: 104 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:cvs:starer:99-13

Contact details of provider:
Postal: C.V. Starr Center, Department of Economics, New York University, 19 W. 4th Street, 6th Floor, New York, NY 10012
Phone: (212) 998-8936
Fax: (212) 995-3932
Email:
Web page: http://econ.as.nyu.edu/object/econ.cvstarr.html
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Order Information:
Postal: C.V. Starr Center, Department of Economics, New York University, 19 W. 4th Street, 6th Floor, New York, NY 10012
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Related research

Keywords: MONETARY POLICY; STABILIZATION; CREDIBILITY.;

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Blog mentions

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  1. Manuel Arellano recibe el premio Jaime I de Economía.
    by Cives in Politikon on 2012-06-05 17:13:35
  2. Could the Shadow Open Market Committee have outperfomed the Fed?
    by Economic Logician in Economic Logic on 2011-05-10 13:51:00
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  1. Economic Logic blog
  2. Nueva Economía Keynesiana in Wikipedia (Spanish)

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