This paper derives a concept of aggregate real income for a competitive economy in general equilibrium consisting of heterogeneous infinitely lived people and relates it to current and future consumption possibilities. An important characteristic of our measure of income, which we call Real Income, is that deflation is carried out using a consumption deflator rather than any price index of outp...

The housing market plays a significant role in the economies of countries, and as an asset price channel, is considered as one of the main channels for monetary transmission mechanism. Considering the structure of the country's economy and the characteristics of housing as a capital commodity, the assessment of the impact of housing investment on inflation is important. This research evaluates ...

Should a central bank accommodate energy price shocks? Should the central bank use core inflation or headline inflation with the volatile energy component in its Taylor rule? To answer these questions, we build a dynamic stochastic general equilibrium model with energy use, durable goods, and nominal rigidities to study the effects of an energy price shock and its impact on the macroeconomy whe...

This paper uses a structurally estimated macroeconometric model, denoted the MC model, to evaluate inflation targeting in the United States. Various interest rate rules are tried with differing weights on inflation and output, and various optimal control problems are solved using differing weights on inflation and output targets. Price-level targeting is also considered. The results show that 1...

This paper investigates whether extensions of the Calvo and menu-cost models that include idiosyncratic technology shocks are consistent with key features of individual consumer price adjustment. The comparison of the models focuses on three facts pertaining to the impact of inflation on the setting of consumer prices. First, the average frequency of consumer price changes initially rises slowl...

Recently, China has a more prominent trend of domestic price rise, which has obviously influenced public’s daily life and corporate production and operation. If we don’t take effective measures to deal with price trend, it will lead to further strengthened inflation expectation and deteriorate market economy order. Business community is actively seeking countermeasures to deal with the impact o...

The Federal Reserve Bank of Cleveland has publicly endorsed a legislative resolution that would make zero inflation, or price-level stability, the overriding long-run objective of the Federal Reserve System. Price-level stability means a policy intended to keep the price level reasonably constant over long horizons. That is, although the price level may fluctuate temporarily in response to tran...