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| Author | : Christopher J. Erceg |
| Publisher | : |
| Total Pages | : 42 |
| Release | : 2002 |
| Genre | : Monetary policy |
| ISBN | : |
| Author | : Alessandro Cantelmo |
| Publisher | : International Monetary Fund |
| Total Pages | : 33 |
| Release | : 2017-03-06 |
| Genre | : Business & Economics |
| ISBN | : 1475584830 |
In an estimated two-sector New-Keynesian model with durable and nondurable goods, an inverse relationship between sectoral labor mobility and the optimal weight the central bank should attach to durables inflation arises. The combination of nominal wage stickiness and limited labor mobility leads to a nonzero optimal weight for durables inflation even if durables prices were fully flexible. These results survive alternative calibrations and interestrate rules and point toward a non-negligible role of sectoral labor mobility for the conduct of monetary policy.
| Author | : Robert B. Barsky |
| Publisher | : |
| Total Pages | : |
| Release | : 2016 |
| Genre | : |
| ISBN | : |
| Author | : Kang Koo Lee |
| Publisher | : |
| Total Pages | : |
| Release | : 2010 |
| Genre | : |
| ISBN | : |
The dissertation studies a model of an economy which produces and exports durable goods. It analyzes the optimal monetary policy for such a country. Generally, monetary policy has a bigger economic effect on durable goods relative to non-durable goods because durable goods can be stored and households get utility from the stock of durable goods. This dissertation shows that, in Nash equilibrium, the central bank of a durable goods producing country can control changes of the price level with smaller changes in the monetary policy instrument. In the cooperative equilibrium, the monetary authority of the country which imports non-durable goods and exports durable goods should raise the interest rate by more, relative to the Nash case, in response to a rise in foreign inflation. On the other hand, the monetary authority of the country which imports durable goods and exports non-durable goods should raise the interest rate by less than the other country.
| Author | : Ivan Petrella |
| Publisher | : |
| Total Pages | : |
| Release | : 2009 |
| Genre | : |
| ISBN | : |
| Author | : Yongjae Choi |
| Publisher | : |
| Total Pages | : 204 |
| Release | : 2006 |
| Genre | : Durable goods, Consumer |
| ISBN | : |
| Author | : Kyoung Soo Han |
| Publisher | : |
| Total Pages | : |
| Release | : 2010 |
| Genre | : |
| ISBN | : |
The dissertation studies the relationship among durable goods, price indexes and monetary policy in two sticky-price models with durable goods. One is a one-sector model with only durable goods and the other is a two-sector model with durable and non-durable goods. In the models with durable goods, the COLI (Cost of Living Index) and the PPI (Producer Price Index) identical to the CPI (Consumer Price Index) measured by the acquisitions approach are distinguished, and the COLI/PPI ratio plays an important rule in monetary policy transmission. The welfare function based on the household utility can be represented by a quadratic function of the quasi-differenced durables-stock gaps and the PPI inflation rates. In the one-sector model, the optimal policy maximizing welfare is to keep the (acquisition) price and the output gap at a constant rate which does not depend on the durability of consumption goods. In the two-sector model with sticky prices, the central bank has only one policy instrument, so it cannot cope with distortions in both sectors. Simulation results show that the PPI is an adequate price index for monetary policy and that a policy of targeting core inflation constructed by putting more weight on prices in the sector producing more durable goods is near optimal.
| Author | : Tommaso Monacelli |
| Publisher | : |
| Total Pages | : 51 |
| Release | : 2006 |
| Genre | : Inflation (Finance) |
| ISBN | : |
"We study optimal monetary policy in an economy with nominal private debt, borrowing constraints and price rigidity. Private debt reflects equilibrium trade between an impatient borrower, who faces an endogenous collateral constraint, and a patient saver, who engages in consumption smoothing. Since inflation can positively affect borrower's net worth, monetary policy optimally balances the incentive to offset the price stickiness distortion with the one of marginally relaxing the borrower's collateral constraint. We find that the optimal volatility of inflation is increasing in three key parameters: (i) the borrower's weight in the planner's objective function; (ii) the borrower's impatience rate; (iii) the degree of price flexibility. In general, however, deviations from price stability are small for a small degree of price stickiness. In a two-sector version of our model, in which durable price movements can directly affect the ability of borrowing, the optimal volatility of (non-durable) inflation is more sizeable. In our context, and relative to simple Taylor rules, the Ramsey-optimal allocation entails a partial smoothing of real durable goods prices"--National Bureau of Economic Research web site.
| Author | : Robert B. Barsky |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2016 |
| Genre | : |
| ISBN | : |
| Author | : Alessandro Cantelmo |
| Publisher | : International Monetary Fund |
| Total Pages | : 81 |
| Release | : 2017-12-22 |
| Genre | : Business & Economics |
| ISBN | : 1484336429 |
In a SVAR model of the US, the response of the relative price of durables to a monetary contraction is either flat or mildly positive. It significantly falls only if narrowly defined as the ratio between new-house and nondurables prices. These findings are rationalized via the estimation of a two-sector New-Keynesian (NK) models. Durables prices are estimated to be as sticky as nondurables, leading to a flat relative price response to a monetary shock. Conversely, house prices are estimated to be almost flexible. Such results survive several robustness checks and a three-sector extension of the NK model. These findings have implications for building two-sector NK models with durable and nondurable goods, and for the conduct of monetary policy.
