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Output Stabilization (output + stabilization)
Selected AbstractsARE LONG-RUN PRICE STABILITY AND SHORT-RUN OUTPUT STABILIZATION ALL THAT MONETARY POLICY CAN AIM FOR?METROECONOMICA, Issue 2 2007Giuseppe Fontana ABSTRACT A central tenet of the so-called new consensus view in macroeconomics is that there is no long-run trade-off between inflation and unemployment. The main policy implication of this principle is that all monetary policy can aim for is (modest) short-run output stabilization and long-run price stability, i.e. monetary policy is neutral with respect to output and employment in the long run. However, research on the different sources of path dependency in the economy suggests that persistent but nevertheless transitory changes in aggregate demand may have a permanent effect on output and employment. If this is the case, then, the way monetary policy is run does have long-run effects on real variables. This paper provides an overview of this research and explores conceptually how monetary policy should be implemented once these long-run effects are acknowledged. [source] The Role of Output Stabilization in the Conduct of Monetary PolicyINTERNATIONAL FINANCE, Issue 2 2002Frederic S. Mishkin This paper examines the role of output stabilization in the conduct of monetary policy. It argues that activist monetary policy , in which the monetary authorities focus on output fluctuations in the setting of their policy instrument and in policy statements , is likely to produce worse outcomes for output and inflation fluctuations, because it will lead to suboptimal monetary policy, but also because it complicates monetary authorities' communication strategy and can weaken the credibility of the central bank. In contrast, conducting monetary policy with a flexible inflation target rule is likely to produce better outcomes. A flexible inflation target rule also allows the monetary authorities to communicate effectively to the public that they do care about output fluctuations, but makes it less likely that they will be encouraged to try to exploit the short,run trade,off between output and inflation. [source] What does Monetary Policy Reveal about a Central Bank's Preferences?ECONOMIC NOTES, Issue 3 2003Efrem Castelnuovo The design of monetary policy depends on the targeting strategy adopted by the central bank. This strategy describes a set of policy preferences, which are actually the structural parameters to analyse monetary policy making. Accordingly, we develop a calibration method to estimate a central bank's preferences from the estimates of an optimal Taylor,type rule. The empirical analysis on US data shows that output stabilization has not been an independent argument in the Fed's objective function during the Greenspan's era. This suggests that the output gap has entered the policy rule only as leading indicator for future inflation, therefore being only instrumental (to stabilize inflation) rather than important per se. (J.E.L.: C61, E52, E58). [source] Measuring the Time Inconsistency of US Monetary PolicyECONOMICA, Issue 297 2008PAOLO SURICO This paper offers an alternative explanation for the great inflation of the 1970s by measuring a novel source of monetary policy time inconsistency. In the presence of asymmetric preferences, the monetary authorities generate a systematic inflation bias through the private-sector expectations of a larger policy response in recessions than in booms. The estimated Fed's implicit target for inflation has declined from the pre- to the post-Volcker regime. The average inflation bias was about 1% before 1979, but this has disappeared over the last two decades, because the preferences on output stabilization were large and asymmetric only in the former period. [source] The Role of Output Stabilization in the Conduct of Monetary PolicyINTERNATIONAL FINANCE, Issue 2 2002Frederic S. Mishkin This paper examines the role of output stabilization in the conduct of monetary policy. It argues that activist monetary policy , in which the monetary authorities focus on output fluctuations in the setting of their policy instrument and in policy statements , is likely to produce worse outcomes for output and inflation fluctuations, because it will lead to suboptimal monetary policy, but also because it complicates monetary authorities' communication strategy and can weaken the credibility of the central bank. In contrast, conducting monetary policy with a flexible inflation target rule is likely to produce better outcomes. A flexible inflation target rule also allows the monetary authorities to communicate effectively to the public that they do care about output fluctuations, but makes it less likely that they will be encouraged to try to exploit the short,run trade,off between output and inflation. [source] ARE LONG-RUN PRICE STABILITY AND SHORT-RUN OUTPUT STABILIZATION ALL THAT MONETARY POLICY CAN AIM FOR?METROECONOMICA, Issue 2 2007Giuseppe Fontana ABSTRACT A central tenet of the so-called new consensus view in macroeconomics is that there is no long-run trade-off between inflation and unemployment. The main policy implication of this principle is that all monetary policy can aim for is (modest) short-run output stabilization and long-run price stability, i.e. monetary policy is neutral with respect to output and employment in the long run. However, research on the different sources of path dependency in the economy suggests that persistent but nevertheless transitory changes in aggregate demand may have a permanent effect on output and employment. If this is the case, then, the way monetary policy is run does have long-run effects on real variables. This paper provides an overview of this research and explores conceptually how monetary policy should be implemented once these long-run effects are acknowledged. [source] | ||||||||||