This file is part of IDEAS , which uses RePEc data
[ Papers |
Articles |
Software |
Books |
Chapters |
Authors |
Institutions |
JEL Classification |
NEP reports |
Search |
New papers by email |
Author registration |
Rankings |
Volunteers |
FAQ |
Blog |
Help! ]
Optimal Interest-Rate Rules: II. Applications Author info | Abstract | Publisher info | Download info | Related research | Statistics Marc P. Giannoni
Michael Woodford
Additional information is available for the following
registered author(s):
In this paper we calculate robustly optimal monetary policy rules for several variants of a simple optimizing model of the monetary transmission mechanism with sticky prices and/or wages. We discuss representations of optimal policy both in terms of interest-rate feedback rules that generalize the well-known Taylor rule,' and in terms of commitment to a target criterion of the kind discussed in familiar proposals for flexible inflation targeting.' Optimal rules, however, require that policy be history-dependent in ways not contemplated by many well-known proposals. We furthermore find that a robustly optimal policy rule is almost inevitably an implicit rule, that requires the central bank to use a structural model to project the economy's evolution under the contemplated policy action. Finally, our numerical examples suggest that optimal rules do not place nearly as much weight on projections of inflation or output many quarters in the future as occurs under the current practice of inflation-forecast targeting central banks.
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page . Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
9420.
Download reference. The following formats are available: HTML
(with abstract ),
plain text
(with abstract ),
BibTeX ,
RIS (EndNote, RefMan, ProCite),
ReDIF
Length:
Date of creation: Jan 2003Date of revision:
Handle: RePEc:nbr:nberwo:9420Note: EFG MEContact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A. Phone: 617-868-3900 Email: Web page: http://www.nber.org More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: ().
Keywords: Other versions of this item:
Find related papers by JEL classification: E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
This paper has been announced in the following NEP Reports :
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Bennett T. McCallum, 2001.
"Should Monetary Policy Respond Strongly to Output Gaps? ,"
American Economic Review ,
American Economic Association, vol. 91(2), pages 258-262, May.
[Downloadable!] (restricted)
Other versions: Clarida, Richard & Galí, Jordi & Gertler, Mark, 1998.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory ,"
CEPR Discussion Papers
1908, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions:
Richard Clarida & Jordi Gali & Mark Gertler, 1998.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory ,"
NBER Working Papers
6442, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Richard Clarida & Jordi Galí & Mark Gertler, 1997.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory ,"
Economics Working Papers
350, Department of Economics and Business, Universitat Pompeu Fabra, revised May 1999.
[Downloadable!] Clarida, R. & Gali, J. & Gertler, M., 1998.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and some Theory ,"
Working Papers
98-01, C.V. Starr Center for Applied Economics, New York University.
[Downloadable!] Richard Clarida & Jordi Galí & Mark Gertler, 2000.
"Monetary Policy Rules And Macroeconomic Stability: Evidence And Some Theory ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 115(1), pages 147-180, February.
[Downloadable!] (restricted) Woodford, Michael, 1999.
"Optimal Monetary Policy Inertia ,"
Manchester School ,
University of Manchester, vol. 67(0), pages 1-35, Supplemen.
[Downloadable!] (restricted)
Other versions:
Woodford, M., 1999.
"Optimal Monetary Policy Inertia. ,"
Papers
666, Stockholm - International Economic Studies.
Woodford, Michael, 2000.
"Optimal Monetary Policy Inertia ,"
Seminar Papers
666, Stockholm University, Institute for International Economic Studies.
[Downloadable!] Michael Woodford, 1999.
"Optimal Monetary Policy Inertia ,"
NBER Working Papers
7261, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Michael Woodford, 1999.
"Optimal monetary policy inertia ,"
Proceedings ,
Federal Reserve Bank of San Francisco.
Bernanke, Ben S & Woodford, Michael, 1997.
"Inflation Forecasts and Monetary Policy ,"
Journal of Money, Credit and Banking ,
Blackwell Publishing, vol. 29(4), pages 653-84, November.
Other versions: Andrew Levin & Volker Wieland & John C. Williams, 2003.
"The Performance of Forecast-Based Monetary Policy Rules under Model Uncertainty ,"
CFS Working Paper Series
2003/06, Center for Financial Studies.
[Downloadable!]
Other versions:
Andrew Levin & John C. Williams, 2000.
"The Performance of Forecast-Based Monetary Policy Rules under Model Uncertainty ,"
Econometric Society World Congress 2000 Contributed Papers
1781, Econometric Society.
[Downloadable!] John C. Williams & Andrew T. Levin & Volker Wieland, 2001.
"The performance of forecast-based monetary policy rules under model uncertainty ,"
Working Paper Series
068, European Central Bank.
[Downloadable!] Andrew Levin & Volker Wieland & John C. Williams, 2001.
"The performance of forecast-based monetary policy rules under model uncertainty ,"
Finance and Economics Discussion Series
2001-39, Board of Governors of the Federal Reserve System (U.S.).
[Downloadable!] Andrew Levin & Volker Wieland & John Williams, 2000.
"The Performance Of Forecast-Based Monetary Policy Rules Under Model Uncertainty ,"
Computing in Economics and Finance 2000
203, Society for Computational Economics.
Andrew Levin & Volker Wieland & John C. Williams, 2003.
"The Performance of Forecast-Based Monetary Policy Rules Under Model Uncertainty ,"
American Economic Review ,
American Economic Association, vol. 93(3), pages 622-645, June.
[Downloadable!] Robert E. Hall, 1984.
"Monetary strategy with an elastic price standard ,"
Proceedings ,
Federal Reserve Bank of Kansas City, pages 137-167.
Sbordone, Argia M., 2002.
"Prices and unit labor costs: a new test of price stickiness ,"
Journal of Monetary Economics ,
Elsevier, vol. 49(2), pages 265-292, March.
[Downloadable!] (restricted)
Other versions:
Argia M. Sbordone, 2001.
"Prices and Unit Labor Costs: A New Test of Price Stickiness ,"
Departmental Working Papers
200112, Rutgers University, Department of Economics.
[Downloadable!] Argia M. Sbordone, 2001.
"Prices and Unit Labor Costs: A New Test of Price Stickiness ,"
Departmental Working Papers
199822, Rutgers University, Department of Economics.
[Downloadable!] Sbordone, Argia, 1998.
"Prices and Unit Labour Costs: A New Test of Price Stickiness ,"
Seminar Papers
653, Stockholm University, Institute for International Economic Studies.
[Downloadable!] Sbordone, A.M., 1998.
"Prices and Unit Labor Costs: a New Test of Price Stickiness ,"
Papers
653, Stockholm - International Economic Studies.
Taylor, John B., 1993.
"Discretion versus policy rules in practice ,"
Carnegie-Rochester Conference Series on Public Policy ,
Elsevier, vol. 39(1), pages 195-214, December.
[Downloadable!] (restricted)
Lars E. O. Svensson, 1997.
"Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets ,"
NBER Working Papers
5797, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Svensson, L-E-O, 1996.
"Inflation Forecast Targeting : Implementaing and Monitoring Inflation Targets ,"
Papers
615, Stockholm - International Economic Studies.
Svensson, Lars E.O., 1997.
"Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets ,"
Seminar Papers
615, Stockholm University, Institute for International Economic Studies.
[Downloadable!] Svensson, Lars E O, 1996.
"Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets ,"
CEPR Discussion Papers
1511, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Lars E O Svensson, .
"Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets ,"
Bank of England working papers
56, Bank of England.
Svensson, Lars E. O., 1997.
"Inflation forecast targeting: Implementing and monitoring inflation targets ,"
European Economic Review ,
Elsevier, vol. 41(6), pages 1111-1146, June.
[Downloadable!] (restricted) Erceg, Christopher J. & Henderson, Dale W. & Levin, Andrew T., 2000.
"Optimal monetary policy with staggered wage and price contracts ,"
Journal of Monetary Economics ,
Elsevier, vol. 46(2), pages 281-313, October.
[Downloadable!] (restricted)
Other versions: Athanasios Orphanides, 1998.
"Monetary policy evaluation with noisy information ,"
Finance and Economics Discussion Series
1998-50, Board of Governors of the Federal Reserve System (U.S.).
[Downloadable!]
Other versions: Frank Smets & Raf Wouters, 2002.
"An estimated dynamic stochastic general equilibrium model of the euro area ,"
Research series
200210, National Bank of Belgium.
[Downloadable!]
Other versions: Nicoletta Batini & Joe Pearlman, 2002.
"Too Much Too Soon: Instability and Indeterminacy with Forward-Looking Rules ,"
Computing in Economics and Finance 2002
182, Society for Computational Economics.
[Downloadable!]
Other versions: Lawrence J. Christiano & Martin Eichenbaum & Charles Evans, 2001.
"Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy ,"
NBER Working Papers
8403, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 2001.
"Nominal rigidities and the dynamic effects of a shock to monetary policy ,"
Working Paper Series
WP-01-08, Federal Reserve Bank of Chicago.
[Downloadable!] Lawrence J. Christiano & Martin Eichenbaum & Charles Evans, 2001.
"Nominal rigidities and the dynamic effects of a shock to monetary policy ,"
Working Paper
0107, Federal Reserve Bank of Cleveland.
[Downloadable!] Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 2005.
"Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy ,"
Journal of Political Economy ,
University of Chicago Press, vol. 113(1), pages 1-45, February.
Lawrence J. Christiano & Martin Eichenbaum & Charles Evans, 2001.
"Nominal rigidities and the dynamic effects of a shock to monetary policy ,"
Proceedings ,
Federal Reserve Bank of San Francisco, issue Jun.
[Downloadable!] Jean Boivin & Marc Giannoni, 2002.
"Has monetary policy become less powerful? ,"
Staff Reports
144, Federal Reserve Bank of New York.
[Downloadable!]
Amato, Jeffery D. & Laubach, Thomas, 2003.
"Rule-of-thumb behaviour and monetary policy ,"
European Economic Review ,
Elsevier, vol. 47(5), pages 791-831, October.
[Downloadable!] (restricted)
Julio Rotemberg & Michael Woodford, 1997.
"An Optimization-Based Econometric Framework for the Evaluation of Monetary Policy ,"
NBER Chapters ,
in: NBER Macroeconomics Annual 1997, Volume 12, pages 297-361
National Bureau of Economic Research, Inc.
[Downloadable!]
William Poole, 1999.
"Monetary policy rules? ,"
Review ,
Federal Reserve Bank of St. Louis, issue Mar, pages 3-12.
[Downloadable!]
Other versions: Steinsson, Jon, 2003.
"Optimal monetary policy in an economy with inflation persistence ,"
Journal of Monetary Economics ,
Elsevier, vol. 50(7), pages 1425-1456, October.
[Downloadable!] (restricted)
Other versions:
Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.) This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page .
Access and
download statistics Did you know? Use the JEL tree to browse through the database by subfields.
This page was last updated on 2009-11-25.
This information is provided to you by IDEAS at the Department of Economics , College of Liberal Arts and Sciences , University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics .