Conventional and unconventional monetary policy
We extend a standard New Keynesian model both to incorporate heterogeneity in spending opportunities along with two sources of (potentially time-varying) credit spreads and to allow a role for the central bank's balance sheet in determining equilibrium. We use the model to investigate the implications of imperfect financial intermediation for familiar monetary policy prescriptions and to consider additional dimensions of central bank policy--variations in the size and composition of the central bank's balance sheet as well as payment of interest on reserves--alongside the traditional question of the proper operating target for an overnight policy rate. We also study the special problems that arise when the zero lower bound for the policy rate is reached. We show that it is possible to provide criteria for the choice of policy along each of these possible dimensions within a single unified framework, and to achieve policy prescriptions that apply equally well regardless of whether financial markets work efficiently or not and regardless of whether the zero bound on nominal interest rates is reached or not.
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- Rajnish Mehra & Facundo Piguillem & Edward C. Prescott, 2007.
"Intermediated quantities and returns,"
655, Federal Reserve Bank of Minneapolis.
- Rajnish Mehra & Edwarad C Prescott & Facundo Piguillem, 2007. "Intermediated Quantities and Returns," Levine's Bibliography 122247000000001580, UCLA Department of Economics.
- Rajnish Mehra & Facundo Piguillem & Edward C. Prescott, 2008. "Intermediated quantities and returns," Staff Report 405, Federal Reserve Bank of Minneapolis.
- Michael Woodford & Pierpaolo Benigno, 2004.
"Inflation Stabilization and Welfare: The Case of a Distorted Steady State,"
2004 Meeting Papers
481, Society for Economic Dynamics.
- Pierpaolo Benigno & Michael Woodford, 2005. "Inflation Stabilization And Welfare: The Case Of A Distorted Steady State," Journal of the European Economic Association, MIT Press, vol. 3(6), pages 1185-1236, December.
- Pierpaolo Benigno & Michael Woodford, 2004. "Inflation Stabilization and Welfare: The Case of a Distorted Steady State," NBER Working Papers 10838, National Bureau of Economic Research, Inc.
- Vasco Cúrdia & Michael Woodford, 2009.
"Credit spreads and monetary policy,"
385, Federal Reserve Bank of New York.
- Vasco Cúrdia & Michael Woodford, 2009.
"Credit frictions and optimal monetary policy,"
BIS Working Papers
278, Bank for International Settlements.
- Rajnish Mehra & Facundo Piguillem & Edward C. Prescott, 2008.
"Costly Financial Intermediation in Neoclassical Growth Theory,"
NBER Working Papers
14351, National Bureau of Economic Research, Inc.
- Rajnish Mehra & Facundo Piguillem & Edward C. Prescott, 2011. "Costly financial intermediation in neoclassical growth theory," Quantitative Economics, Econometric Society, vol. 2(1), pages 1-36, 03.
- Rajnish Mehra & Facundo Piguillem & Edward C. Prescott, 2011. "Costly financial intermediation in neoclassical growth theory," Working Papers 685, Federal Reserve Bank of Minneapolis.
- M. H. Khalil Timamy, 2005. "Debate," Review of African Political Economy, Taylor & Francis Journals, vol. 32(104-105), pages 383-393, June.
- Gertler, Mark & Karadi, Peter, 2011. "A model of unconventional monetary policy," Journal of Monetary Economics, Elsevier, vol. 58(1), pages 17-34, January.
- Michael Woodford, 2012.
"Forecast Targeting as a Monetary Policy Strategy - Policy Rules in Practice,"
in: Evan F. Koenig & Robert Leeson & George A. Kahn (ed.), The Taylor Rule and the Transformation of Monetary Policy, chapter 9
Hoover Institution, Stanford University.
- Michael Woodford, 2007. "Forecast Targeting as a Monetary Policy Strategy: Policy Rules in Practice," NBER Working Papers 13716, National Bureau of Economic Research, Inc.
- repec:clu:wpaper:0809-02 is not listed on IDEAS
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