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...

In May 1927, the German central bank intervened indirectly to reduce lending to equity investors. The crash that followed ended the only stock market boom during Germany’s relative stabilization 1924-28. This paper examines the factors that lead to the intervention as well as its consequences. We argue that genuine concern about the ‘exuberant’ level of the stock market, in addition to worries ...

A growing empirical and theoretical literature argues in favor of specifying monetary policy in the form of Taylor-type interest rate feedback rules. That is, rules whereby the nominal interest rate is set as an increasing function of inflation with a slope greater than one around an intended inflation target. This paper shows that because of the zero bound on nominal interest rates, such rules...

Real interest and inflation rates have been very low in many industrialized countries since the Great Recession. In this paper, a mechanism of low and floating real interest and inflation rates is examined based on the concept a “Nash equilibrium of a Pareto inefficient path” and the law of motion for trend inflation. I show that, because the link between the marginal product of capital and the...

This paper reviews analytical work carried out by central banks that participated in the Autumn Meeting of Central Bank Economists on “The evolving inflation process” which the BIS hosted on 28-29 October 2005. The paper first discusses efforts to document the univariate statistical properties of inflation and how they have changed over the last decades. It then reviews studies of disaggregated...

In the wake of steep fall in national savings due to economic shocks, among them COVID-19 pandemic macroeconomic consequences, this study examines what extent inflation explains variation saving behavior developing countries. Most past empirical studies investigated role on only advanced nations. The current will investigate effect culture Kenya. To determine how saving, use s ordinary least sq...

We propose a way to test the New Keynesian Phillips Curve (NKPC) without estimating the structural parameters governing the curve, i.e. price stickiness and firms’ backwardness. Using this strategy we can test the NKPC avoiding the identification problems related to the GMM approach. We find that it does not exist a combination of the structural parameters which is consistent with US data. This...

The remarkable stability of low domestic inflation in many countries requires explanation. In this paper, a number of competing hypotheses are evaluated on a stand-alone basis, and all are found to be inadequate. This includes the view that this outcome has been solely the result of more effective disinflationary monetary policies. However, a combination of these hypotheses (including a signifi...

This paper deals with a critical assessment and a reestimation of the “non–accelerating inflation rate of unemployment” (NAIRU) for Germany. There are quite a few obstacles to perceiving the NAIRU as an understandable and easy–to–use analytical instrument, suitable for economic policy: the possibility of a non–vertical Phillips curve (e.g. in times of low inflation), the occurrence of shocks an...

I study the effects of a lack of common knowledge on nominal adjustment in a dynamic price-setting game with incomplete information. In particular, I show how the speed of price adjustments following a nominal or real shock depends on the information structure among pricesetters. The provision of public information leads to a reduction of higher-order uncertainty, and hence to more rapid price ...