Global Knowledge, Local Solutions: Interest Rate and Monetary Policy

Monetary Policy Committees and Interest Rate Smoothing

We extend the New Keynesian Monetary Policy literature relaxing the assumption that the decisions are taken by a single policymaker, considering instead that monetary policy decisions are taken collectively in a committee. We introduce a Monetary Policy Committee (MPC), whose members have different preferences between output and inflation variability and have to vote on the level of the interes...

Persistent Habits, Optimal Monetary Policy Inertia and Interest Rate Smoothing

Dynamic stochastic general equilibrium models featuring imperfect competition and nominal rigidities have become central for the analysis of the monetary transmission mechanism and for understanding the conduct of monetary policy. However, it is agreed that the benchmark model fails to generate the persistence of output and in‡ation that is observed in the data. Moreover, it cannot provide a th...

Designing Monetary Policy : Backward - Looking Interest - Rate Rules ∗

When real balances have even a very small productive role, contemporaneous and forwardlooking Taylor-Wicksell rules can induce ubiquitous multiplicities of equilibria and lead to consequences that are unintended by policymakers. This raises the issue of whether it is possible to anchor and stabilize the economy through backward-looking rules. We show that the standard uniqueness results that ar...

Monetary Policy without Interest Rates

Many econometric studies use both a narrative approach and an interest rate series to investigate the e ects of US monetary policy. The two alternative measures provide very similar conclusions. This similarity in the results is not likely to be found when central banks use numerous instruments, including unconventional quantitative targets. This paper studies the French experience with tempora...

Monetary Policy and Long-term Interest Rates

This paper documents some new empirical results about the monetary policy and long-term interest rates in the United States. It shows that changes in the monetary policy stance are more predictable to the bond market in the 1990s than in the 1970s. This shift in the predictability of the monetary policy actions affects the policy’s impact on long-term interest rates as well as the forecasting p...

Taylor interest rate and Monetary Conditions Index