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New Keynesian Microfoundations Revisited: A Calvo-Taylor-Rule-of-Thumb Model and Optimal Monetary Policy Delegation Author info | Abstract | Publisher info | Download info | Related research | Statistics Richard Mash
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We analyze the microfoundations of the Phillips curve and the close links between that relationship and results concerning optimal monetary policy, stabilisation bias and monetary policy delegation. Most recent literature has used a New Keynesian Phillips Curve based on Calvo pricing, often with an additional lagged inflation term motivated by rule-of-thumb behaviour. We develop a framework which encompasses this workhorse model while allowing for a richer time dependent pricing rule. This permits a more general analysis while showing that the standard model and policy conclusions derived from it are not robust to relatively minor changes in its microfoundations.
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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number
174.
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Date of creation: 2003Date of revision:
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Keywords: monetary policy New Keynesian Phillips Curve Calvo pricing rule of thumb stabilisation bias Monetary Policy Delegation 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 E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis
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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.)
Richard Mash, 2004.
"Optimising Microfoundations for Inflation Persistence ,"
Economics Series Working Papers
183, University of Oxford, Department of Economics.
[Downloadable!]
Other versions: Richard Mash, 2003.
"A Note on Simple MSV Solution Methods for Rational Expectations Models of Monetary Policy ,"
Economics Series Working Papers
173, University of Oxford, Department of Economics.
[Downloadable!]
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