Forward Guidance at the Zero Lower Bound in a Model of Price-Level Targeting
نویسندگان
چکیده
منابع مشابه
Discussion of "Limitations on the e¤ectiveness of forward guidance at the zero lower bound"
What should the monetary authority do when prices are sticky? One answer to this question is provided by the standard New Keynesian model of sticky prices. It says that optimal monetary policy should fully stabilize the long-term price level in many environments. For example, if all uctuations are in the "IS curve", then the optimal monetary policy under commitment is simply for the short-term...
متن کاملDiscussion of “Limitations on the Effectiveness of Forward Guidance at the Zero Lower Bound”
What should the monetary authority do when prices are sticky? One answer to this question is provided by the standard New Keynesian model of sticky prices. It says that optimal monetary policy should fully stabilize the long-term price level in many environments. For example, if all fluctuations are in the “IS curve,” then the optimal monetary policy under commitment is simply for the short-ter...
متن کاملExchange Rate Flexibility under the Zero Lower Bound: the Need for Forward Guidance
Macroeconomic theory says that when a country is vulnerable to idiosyncratic macro shocks, it should have its own currency and a flexible exchange rate. But recently in many countries, interest rates have been pushed down close to the lower bound, limiting the ability of policy-makers to accommodate shocks, even in countries with flexible exchange rates. This paper argues that if the zero bound...
متن کاملComparing Inflation and Price Level Targeting: the Role of Forward Guidance and Transparency
We examine global dynamics under learning in New Keynesian models with price level targeting that is subject to the zero lower bound. The role of forward guidance is analyzed under transparency about the policy rule. Properties of transparent and non-transparent regimes are compared to each other and to the corresponding cases of inflation targeting. Robustness properties for different regimes ...
متن کاملThe Zero Lower Bound
In the standard New Keynesian model, monetary policy is often described by an interest rate rule (e.g. a Taylor rule) that moves the interest rate in response to deviations of inflation and some measure of economic activity from target. Nominal interest rates are bound from below by 0 – since money is storable, one would never accept a negative nominal return. How does the behavior of the NK mo...
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ژورنال
عنوان ژورنال: CESifo Economic Studies
سال: 2015
ISSN: 1610-241X,1612-7501
DOI: 10.1093/cesifo/ifv011