Download or read book Search and Matching Frictions and Optimal Monetary Policy written by and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: I analyze optimal monetary policy in an economy with search and matching frictions in the labor market and staggered nominal wage and price contracts. In this framework, as opposed to the standard New Keynesian model, preset nominal wages need not have any effect on existing employment relationships. However, staggered bargaining of nominal wages distorts aggregate job creation and creates inefficient dispersion in hiring rates across firms. Targeting zero inflation (the optimal policy in the standard New Keynesian model) only magnifies these distortions. The optimal policy allows for non-zero inflation in response to real shocks, so as to reduce the rigidity of real wages. Quantitatively, the case against price stability as the sole goal of monetary policy turns out to be important.

Download or read book Equilibrium Unemployment and Optimal Monetary Policy written by and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: I introduce unemployment into the New Keynesian model by assuming search and matching frictions in the labor market, and analyze the implications for optimal monetary policy. In this framework, firms can adjust both their number of workers and hours per worker. Social efficiency requires eliminating inflation, closing the output gap (equivalently, setting hours at their efficient level), as well as preventing deviations of employment from its efficient path. I show that, provided the economy's steady state is efficient, if wages follow the Nash bargaining rule the central bank can achieve the efficient allocation. If wages are rigid, then the central bank faces a trade-off among its stabilization objectives. Following e.g. a negative productivity shock, the central bank must temporarily concede an increase in inflation, a drop in the output gap and a fall in employment below its efficient path.

Download or read book Employment Hours and Optimal Monetary Policy written by and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Optimal Monetary Policy Under Uncertainty written by Richard T. Froyen and published by Edward Elgar Publishing. This book was released on 2008-01-01 with total page 341 pages. Available in PDF, EPUB and Kindle. Book excerpt: Froyen and Guender have provided a thorough and careful analysis of optimal monetary policy over most of the range of theoretical models that have been used in modern macroeconomics. By providing a comprehensive and clear comparative framework they will help the student of monetary policy understand why there have been conflicting views of what policy makers should do. Central Banking In Optimal Monetary Policy Under Uncertainty, academicians and economists Richard T. Froyen and Alfred V. Guender have collaborated on presenting an informed and informative survey of optimal monetary policy literature arising during the 1970s and 1980s as a ground work for understanding current market and other economic influences on such germane issues as discretion versus commitment, target versus instrument rules, and the delegation of policy making authority within the private and public sectors. With meticulous attention to scholarship and objectivity. . . Optimal Monetary Policy Under Uncertainty is a thoughtful and thought-provoking body of work that is very strongly recommended for professional, academic, corporate and governmental economic reference collections and supplemental reading lists. Midwest Book Review Recently there has been a resurgence of interest in the study of optimal monetary policy under uncertainty. This book provides a thorough survey of the literature that has resulted from this renewed interest. The authors ground recent contributions on the science of monetary policy in the literature of the 1970s, which viewed optimal monetary policy as primarily a question of the best use of information, and studies in the 1980s that gave primacy to time inconsistency problems. This broad focus leads to a better understanding of current issues such as discretion versus commitment, target versus instrument rules, and the merits of delegation of policy authority. Casting a wide net, the authors survey the recent literature on the New Keynesian approach to optimal monetary policy in the context of the earlier literature. They emphasize the relationship between policy decisions and the information set available to the policymaker, a central focus of the earlier literature, obscured in much recent work. Optimal policy questions are considered in open as well as closed economy models and the often confusing terminology in the literature is sorted and clarified. Questions are considered within easily analysed models and the authors clearly show why these models lead to different (or equivalent) policy conclusions. Recent policy issues such as desirability of inflation targeting and the relative merits of target versus instrument rules are covered in detail. Economists in academia and in policymaking organizations who want to learn about recent developments in the area of optimal monetary policy, as well as graduate and advanced undergraduate students in macroeconomic and monetary economics, will find this volume a clear and thorough examination of the topic.

Download or read book Optimal Monetary Policy Rules with Labor Market Frictions written by Ester Faia and published by . This book was released on 2006 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Financial Frictions and the Design of Optimal Monetary Policy written by Benjamin Schwanebeck and published by kassel university press GmbH. This book was released on 2018-07-02 with total page 6 pages. Available in PDF, EPUB and Kindle. Book excerpt: The financial crisis proved strikingly that the structure of the financial system and financial frictions play a crucial role for the effectiveness of monetary policy but also for system risk. Policymakers have overlooked financial intermediation and financial stability. Shadow banks and especially in the euro area the interbank market play a crucial role in propagating financial turmoil. This dissertation addresses these circumstances and contributes to the research on the optimal design of macroeconomic policy with a particular focus on monetary unions with heterogeneous financial sectors. As the consequences for monetary policy are at the heart of this thesis, I use state-of-the-art dynamic stochastic general equilibrium models and implement financial intermediation and frictions to analyze the transmission channels and interactions of (optimal) fiscal, monetary, macroprudential as well as unconventional monetary policy.

Download or read book Credit Frictions and Optimal Monetary Policy written by and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Optimal monetary policy with informational frictions written by George-Marios Angeletos and published by . This book was released on 2011 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study optimal monetary policy in an environment in which firms' pricing and production decisions are subject to informational frictions. Our framework accommodates multiple formalizations of these frictions, including dispersed private information, sticky information, and certain forms of inattention. An appropriate notion of constrained efficiency is analyzed alongside the Ramsey policy problem. Similar to the New-Keynesian paradigm, efficiency obtains with a subsidy that removes the monopoly distortion and a monetary policy that replicates flexible-price allocations. Nevertheless, "divine coincidence" breaks down and full price stability is no more optimal. Rather, the optimal policy is to "lean against the wind", that is, to target a negative correlation between the price level and real economic activity. Keywords: Business Cycles, Dispersed Information, Stick Information, Rational Inattention, Optimal Policy, Price Stability. JEL Classifications: E32, E52, D61, D83.

Download or read book Labor Markets and Business Cycles written by Robert Shimer and published by Princeton University Press. This book was released on 2010-04-12 with total page 189 pages. Available in PDF, EPUB and Kindle. Book excerpt: Labor Markets and Business Cycles integrates search and matching theory with the neoclassical growth model to better understand labor market outcomes. Robert Shimer shows analytically and quantitatively that rigid wages are important for explaining the volatile behavior of the unemployment rate in business cycles. The book focuses on the labor wedge that arises when the marginal rate of substitution between consumption and leisure does not equal the marginal product of labor. According to competitive models of the labor market, the labor wedge should be constant and equal to the labor income tax rate. But in U.S. data, the wedge is strongly countercyclical, making it seem as if recessions are periods when workers are dissuaded from working and firms are dissuaded from hiring because of an increase in the labor income tax rate. When job searches are time consuming and wages are flexible, search frictions--the cost of a job search--act like labor adjustment costs, further exacerbating inconsistencies between the competitive model and data. The book shows that wage rigidities can reconcile the search model with the data, providing a quantitatively more accurate depiction of labor markets, consumption, and investment dynamics. Developing detailed search and matching models, Labor Markets and Business Cycles will be the main reference for those interested in the intersection of labor market dynamics and business cycle research.

Download or read book Labor Mobility in a Monetary Union written by Daniela Hauser and published by . This book was released on 2019 with total page 103 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The optimal currency literature has stressed the importance of labor mobility as a precondition for the success of monetary unions. But only a few studies formally link labor mobility to macroeconomic adjustment and policy. In this paper, we study macroeconomic dynamics and optimal monetary policy in an economy with cyclical labor flows across two distinct regions that share trade links and a common monetary framework. In our New Keynesian dynamic, stochastic, general-equilibrium model calibrated to the United States, migration flows are driven by fluctuations in the relative labor market performance across the monetary union. While labor mobility can be an additional channel for cross-regional spillovers as well as a regional shock absorber, we find that a mobile labor force closes the efficiency gaps in the labor market and thus lessens the trade-off between inflation and labor market stabilization. As migration flows are generally inefficient, however, region-specific disturbances introduce additional trade-offs with regional labor market conditions. Putting some weight on stabilizing fluctuations in the labor market enhances welfare when monetary policy follows a simple rule"--Abstract, page ii.

Download or read book Ramsey Monetary Policy and International Relative Prices written by Ester Faia and published by . This book was released on 2004 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the design of optimal monetary policy (in terms of unconstrained Ramseyallocation) in a framework with sticky prices and matching frictions. Furthermore I consider therole of real wage rigidities. Optimal policy features significant deviations from price stabilityin response to various shocks. This is so since search externalities generate an unemployment/inflation trade-off. In response to productivity shocks optimal policy is pro-cyclical whenthe worker's bargaining power is higher than the share of unemployed people in the matchingtechnology and viceversa. This is so since when the workers share of surplus is high there aremany searching workers and few vacancies hence the monetary authority has an incentive to increasevacancy profitability by reducing the interest rate and increasing inflation. The oppositeis true when the workers' share of surplus is high. This implies that optimal inflation volatilityis U-shaped with respect to workers' bargaining power.

Download or read book Optimal Unemployment Insurance written by Andreas Pollak and published by Mohr Siebeck. This book was released on 2007 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt: Designing a good unemployment insurance scheme is a delicate matter. In a system with no or little insurance, households may be subject to a high income risk, whereas excessively generous unemployment insurance systems are known to lead to high unemployment rates and are costly both from a fiscal perspective and for society as a whole. Andreas Pollak investigates what an optimal unemployment insurance system would look like, i.e. a system that constitutes the best possible compromise between income security and incentives to work. Using theoretical economic models and complex numerical simulations, he studies the effects of benefit levels and payment durations on unemployment and welfare. As the models allow for considerable heterogeneity of households, including a history-dependent labor productivity, it is possible to analyze how certain policies affect individuals in a specific age, wealth or skill group. The most important aspect of an unemployment insurance system turns out to be the benefits paid to the long-term unemployed. If this parameter is chosen too high, a large number of households may get caught in a long spell of unemployment with little chance of finding work again. Based on the predictions in these models, the so-called "Hartz IV" labor market reform recently adopted in Germany should have highly favorable effects on the unemployment rates and welfare in the long run.

Download or read book Optimal Monetary Policy Rules Asset Prices and Credit Frictions written by Ester Faia and published by . This book was released on 2005 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Optimal Monetary Policy Rulses Asset Prices an Credit Frictions written by Ester Faia and published by . This book was released on 2005 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Monetary Theory and Policy third edition written by Carl E. Walsh and published by MIT Press. This book was released on 2010-02-12 with total page 639 pages. Available in PDF, EPUB and Kindle. Book excerpt: A new edition of the leading text in monetary economics, a comprehensive treatment revised and enhanced with new material reflecting recent advances in the field. This text presents a comprehensive treatment of the most important topics in monetary economics, focusing on the primary models monetary economists have employed to address topics in theory and policy. It covers the basic theoretical approaches, shows how to do simulation work with the models, and discusses the full range of frictions that economists have studied to understand the impacts of monetary policy. Among the topics presented are money-in-the-utility function, cash-in-advance, and search models of money; informational, portfolio, and nominal rigidities; credit frictions; the open economy; and issues of monetary policy, including discretion and commitment, policy analysis in new Keynesian models, and monetary operating procedures. The use of models based on dynamic optimization and nominal rigidities in consistent general equilibrium frameworks, relatively new when introduced to students in the first edition of this popular text, has since become the method of choice of monetary policy analysis. This third edition reflects the latest advances in the field, incorporating new or expanded material on such topics as monetary search equilibria, sticky information, adaptive learning, state-contingent pricing models, and channel systems for implementing monetary policy. Much of the material on policy analysis has been reorganized to reflect the dominance of the new Keynesian approach. Monetary Theory and Policy continues to be the only comprehensive and up-to-date treatment of monetary economics, not only the leading text in the field but also the standard reference for academics and central bank researchers.

Download or read book Optimal Monetary Policy in a Small Open Economy with Financial Frictions written by Rossana Merola and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Monetary Theory and Policy fourth edition written by Carl E. Walsh and published by MIT Press. This book was released on 2017-05-12 with total page 668 pages. Available in PDF, EPUB and Kindle. Book excerpt: The new edition of a comprehensive treatment of monetary economics, including the first extensive coverage of the effective lower bound on nominal interest rates. This textbook presents a comprehensive treatment of the most important topics in monetary economics, focusing on the primary models monetary economists have employed to address topics in theory and policy. Striking a balance of insight, accessibility, and rigor, the book covers the basic theoretical approaches, shows how to do simulation work with the models, and discusses the full range of frictions that economists have studied to understand the impacts of monetary policy. For the fourth edition, every chapter has been revised to improve the exposition and to reflect recent research. The new edition offers an entirely new chapter on the effective lower bound on nominal interest rates, forward guidance policies, and quantitative and credit easing policies. Material on the basic new Keynesian model has been reorganized into a single chapter to provide a comprehensive analysis of the model and its policy implications. In addition, the chapter on the open economy now reflects the dominance of the new Keynesian approach. Other new material includes discussions of price adjustment, labor market frictions and unemployment, and moral hazard frictions among financial intermediaries. References and end-of-chapter problems allow readers to extend their knowledge of the topics covered. Monetary Theory and Policy continues to be the most comprehensive and up-to-date treatment of monetary economics, not only the leading text in the field but also the standard reference for academics and central bank researchers.