Author: Gauti B. Eggertsson
Publisher:
ISBN: 9781457845727
Category : Business & Economics
Languages : en
Pages : 40
Book Description
A rich literature from the 1970s shows that as inflation expectations become more and more ingrained, monetary policy loses its stimulative effect. In the extreme, with perfectly anticipated inflation, there is no trade-off between inflation and output. Recent literature on the interest-rate zero lower bound, however, suggests there may be some benefits from anticipated inflation when the economy is in a liquidity trap. This study reconciles these two views by showing that while it is true that, at positive interest rates, the greater the anticipated inflation the less stimulative are the effects, the opposite holds true at the zero bound. Indeed, at the zero bound, the more the public anticipates inflation, the greater is the expansionary effect of inflation on output. This leads the authors to revisit the trade-off between inflation and output and to show how radically it changes in the face of demand shocks large enough to bring the economy into a liquidity trap. Instead of vanishing once inflation becomes anticipated, the trade-off between inflation and output increases substantially and may become arbitrarily large. In such cases, raising the inflation target in a liquidity trap can be very stimulative. Figures. This is a print on demand report.
The Inflation-Output Trade-Off Revisited
Author: Gauti B. Eggertsson
Publisher:
ISBN: 9781457845727
Category : Business & Economics
Languages : en
Pages : 40
Book Description
A rich literature from the 1970s shows that as inflation expectations become more and more ingrained, monetary policy loses its stimulative effect. In the extreme, with perfectly anticipated inflation, there is no trade-off between inflation and output. Recent literature on the interest-rate zero lower bound, however, suggests there may be some benefits from anticipated inflation when the economy is in a liquidity trap. This study reconciles these two views by showing that while it is true that, at positive interest rates, the greater the anticipated inflation the less stimulative are the effects, the opposite holds true at the zero bound. Indeed, at the zero bound, the more the public anticipates inflation, the greater is the expansionary effect of inflation on output. This leads the authors to revisit the trade-off between inflation and output and to show how radically it changes in the face of demand shocks large enough to bring the economy into a liquidity trap. Instead of vanishing once inflation becomes anticipated, the trade-off between inflation and output increases substantially and may become arbitrarily large. In such cases, raising the inflation target in a liquidity trap can be very stimulative. Figures. This is a print on demand report.
Publisher:
ISBN: 9781457845727
Category : Business & Economics
Languages : en
Pages : 40
Book Description
A rich literature from the 1970s shows that as inflation expectations become more and more ingrained, monetary policy loses its stimulative effect. In the extreme, with perfectly anticipated inflation, there is no trade-off between inflation and output. Recent literature on the interest-rate zero lower bound, however, suggests there may be some benefits from anticipated inflation when the economy is in a liquidity trap. This study reconciles these two views by showing that while it is true that, at positive interest rates, the greater the anticipated inflation the less stimulative are the effects, the opposite holds true at the zero bound. Indeed, at the zero bound, the more the public anticipates inflation, the greater is the expansionary effect of inflation on output. This leads the authors to revisit the trade-off between inflation and output and to show how radically it changes in the face of demand shocks large enough to bring the economy into a liquidity trap. Instead of vanishing once inflation becomes anticipated, the trade-off between inflation and output increases substantially and may become arbitrarily large. In such cases, raising the inflation target in a liquidity trap can be very stimulative. Figures. This is a print on demand report.
The Inflation-output Trade-off
Author: Weshah Razzak
Publisher:
ISBN:
Category : Consumer price indexes
Languages : en
Pages : 36
Book Description
Publisher:
ISBN:
Category : Consumer price indexes
Languages : en
Pages : 36
Book Description
Inflation-output Trade-offs and the Implications for Monetary Policy
Author: Alexander Lammertsma
Publisher:
ISBN: 9789090110318
Category :
Languages : en
Pages : 160
Book Description
Publisher:
ISBN: 9789090110318
Category :
Languages : en
Pages : 160
Book Description
The Inflation-output Trade Off
Author: Weshah Razzak
Publisher:
ISBN:
Category :
Languages : en
Pages : 17
Book Description
Publisher:
ISBN:
Category :
Languages : en
Pages : 17
Book Description
Output Inflation Trade-off
Author: Shiou-Yen Chu
Publisher:
ISBN:
Category :
Languages : en
Pages : 14
Book Description
Publisher:
ISBN:
Category :
Languages : en
Pages : 14
Book Description
Inflation/Output Variance Trade-Offs and Optimal Monetary Policy
Author: Jeffrey C. Fuhrer
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
I estimate the inflation/output-gap variance trade-off faced by monetary policymakers in the U.S. For policymakers who care about deviations of inflation around target and output around potential, the estimated trade-off represents the "optimal policy frontier." Given the structure of the economy, policymakers can do no better than to attain weighted variances of inflation and output that lie on the frontier. I find that the variance trade-off becomes quite severe when the standard deviation of inflation or output drops much below 2%. This suggests that approximately balanced responses to policy goals are consistent with reasonable preferences over inflation and output variability.
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
I estimate the inflation/output-gap variance trade-off faced by monetary policymakers in the U.S. For policymakers who care about deviations of inflation around target and output around potential, the estimated trade-off represents the "optimal policy frontier." Given the structure of the economy, policymakers can do no better than to attain weighted variances of inflation and output that lie on the frontier. I find that the variance trade-off becomes quite severe when the standard deviation of inflation or output drops much below 2%. This suggests that approximately balanced responses to policy goals are consistent with reasonable preferences over inflation and output variability.
The Output
Author: Miloslav S. Vošvrda
Publisher:
ISBN:
Category : Inflation (Finance)
Languages : en
Pages : 14
Book Description
Publisher:
ISBN:
Category : Inflation (Finance)
Languages : en
Pages : 14
Book Description
The Inflation-Output Trade-Off
Author: Weshah A. Razzak
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
New Zealand data show that the inflation-output relationship is asymmetric. This asymmetry implies that positive demand shocks tend to increase inflation by more than negative demand shocks of similar magnitudes reduce it. An important implication of this asymmetry is that a monetary authority with the objective of maintaining the inflation rate within a narrow band needs to react more promptly to demand shocks than otherwise be necessary. Alternatively, policy that is slow to respond to demand disturbances will result in higher inflation, and greater losses of output than would be the case with a linear Phillips curve.
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
New Zealand data show that the inflation-output relationship is asymmetric. This asymmetry implies that positive demand shocks tend to increase inflation by more than negative demand shocks of similar magnitudes reduce it. An important implication of this asymmetry is that a monetary authority with the objective of maintaining the inflation rate within a narrow band needs to react more promptly to demand shocks than otherwise be necessary. Alternatively, policy that is slow to respond to demand disturbances will result in higher inflation, and greater losses of output than would be the case with a linear Phillips curve.
The New Output-inflation Trade-off
Author: Carl E. Walsh
Publisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Publisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Output-Inflation Trade-offs and the Optimal Inflation Rate
Author: Takushi Kurozumi
Publisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Publisher:
ISBN:
Category :
Languages : en
Pages :
Book Description