Assessing Simple Policy Rules: A View from a Complete Macro Model
نویسندگان
چکیده
منابع مشابه
Assessing Simple Policy Rules: A View from a Complete Macro Model
We explore two popular approaches to empirical analysis of monetary policy: the New Keynesian and the identified vector autoregression approaches. Stylized models of private behavior coupled with simple rules describing policy behavior characterize New Keynesian work. Vector autoregressions consist of minimally identified dynamic descriptions of private behavior coupled with a detailed rule for...
متن کاملAssessing Simple Policy Rules: A View from a Complete Macroeconomic Model
Policy analysts must make tough choices: should they use a model where the economic behavior is stripped down and easy to understand, but whose fit to data is crude, or should they use a model whose fit and forecast performance are good, but with economic behavior that is not very detailed? The need to tell tidy stories frequently dominates the desire to fit data. This is not a choice between “...
متن کاملAssessing Simple Policy Rules: A View from a Complete Macroeconomic Model
stories frequently dominates the desire to fit data. This is not a choice between " simple " and " complex " though it is sometimes couched as such. A model must be simple if it's to be understood. It must be understood if it's to inform policy debates. Unfortunately, we understand models on a qualitative level, while we use them for policy analysis on a quantitative level. Tensions arise in mo...
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We use a dynamic stochastic general equilibrium model to address two questions about U.S. monetary policy: 1) Can monetary policy elevate output when it is below potential? and 2) Is the zero lower bound a trap? The model’s answer to the first question is yes it can, but the effect is only temporary and probably not welfare enhancing. The answer to the second question is more complicated becaus...
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We construct an optimizing-agent model of a closed economy which is simple enough that we can use it to make exact utility calculations. There is a stabilization problem because there are one-period nominal contracts for wages, or prices, or both and shocks that are unknown at the time when contracts are signed. We evaluate alternative monetary policy rules using the utility function of the rep...
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ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2001
ISSN: 1556-5068
DOI: 10.2139/ssrn.253988