2 edition of Expectations, credibility, and time-consistent monetary policy found in the catalog.
Expectations, credibility, and time-consistent monetary policy
Peter N. Ireland
|Statement||Peter N. Ireland.|
|Series||NBER working paper series -- working paper 7234, Working paper series (National Bureau of Economic Research) -- working paper no. 7234.|
|Contributions||National Bureau of Economic Research.|
|LC Classifications||HB1 .W654 no. 7234|
|The Physical Object|
|Pagination||39 p.,  p. of plates :|
|Number of Pages||39|
The Great Inflation was the defining macroeconomic event of the second half of the twentieth century. Over the nearly two decades it lasted, the global monetary system established during World War II was abandoned, there were four economic recessions, two severe energy shortages, and the unprecedented peacetime implementation of wage and price controls. There are several factors that determine the quantity and quality of these effects, as reflected in fiscal multipliers, including monetary and exchange rate policy, openness of the economy, the form of fiscal adjustment (that is, government consumption, transfers, and taxes), and exogenous credibility effects that alter the risk of default.
Abstract: We develop a two-game tariff model (a pre-commitment game and a time-consistent game) to analyze the credibility of government's tariff reform announcements. We show that, in the absence of a pre-commitment mechanism, a government's ex-ante and ex-post optimal policy choices are different. Journal of Monetary Economics 32 () North Holland Central bank strategies, credibility, and independence A review essay Carl E. Walsh* University of California, Santa Cruz, CA, USA Federal Reserve Bank of San Francisco, San Francisco, CA, USA Received August Key words: Inflation; Monetary policy; Central banking JEL classification: E58; E31 by:
Economic Understanding and Postwar Stabilization Policy monetary policy.1 The Berkeley story is that the monetary policy than time-consistent outcomes. In these bad self-sustaining equilibria, the Fed has incentives to confirm expectations that it will choose bad policy. In . This paper considers the question of the convergence of expectations and policy in a model of monetary policy with asymmetric and imperfect information On the Convergence of Beliefs and Policy to a Rational Expectations Equilibrium in a Dual Policy Problem. (), “Credibility and the value of information transmission in a model of Cited by: 6.
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Get this from a library. credibility Expectations, credibility, and time-consistent monetary policy. [Peter N Ireland; National Bureau of Economic Research.]. Downloadable. This paper addresses the problem of multiple equilibria in a model of time-consistent monetary policy. It suggests that this problem originates in the assumption that agents have rational expectations and proposes several alternative restrictions on expectations that allow the monetary authority to build credibility for a disinflationary policy by demonstrating that it will stick.
Expectations, Credibility, and Time-Consistent Monetary Policy Article in Macroeconomic Dynamics 4(04) February with 13 Reads How we measure 'reads'.
This paper addresses the problem of multiple equilibria in a model of time-consistent monetary policy.
It suggests that this problem originates in the assumption that agents have rational expectations and proposes several alternative restrictions on expectations that allow the monetary authority to build credibility for a disinflationary policy by demonstrating that it will stick to that Cited by: Downloadable.
This paper addresses the problem of multiple equilibria in a model of time-consistent monetary policy. The author suggests that the problem originates in the assumption that agents have rational expectations and proposes several alternative restrictions on expectations that allow the monetary authority to build credibility for a disinflationary policy by demonstrating that it.
Get this from a library. Expectations, credibility, and time-consistent monetary policy. [Peter N Ireland; National Bureau of Economic Research.] -- Abstract: This paper addresses the problem of multiple equilibria in a model of time-consistent monetary policy.
It suggests that this problem originates in the assumption that agents have rational. Credibility and monetary policy: theory and evidence Mervyn King, an Executive Director of the Bank and its Chief Economist, looks(1) at the concept of credibility in monetary policy, why it is important and how it can be measured.
A monetary strategy is credible if the public believes that the government will actually carry out its stated. Economics Blogs. Expectations matter both for central banks, which manage monetary policy, and for government executives and legislators, who set fiscal policy.
The Federal Reserve learned its lesson on expectations in the early s, when Chairman Volcker decided to bring inflation under : Daniel R. Carroll. The monetary policy framework relies on the short-term nominal interest rate (i t) as its key policy instrument. ATaylor ()-type monetary policy rule is generally viewed as a simple and practical guide for the conduct of monetary policy that appears to describe U.S.
data. Inflation-forecast targeting is state of the art for monetary policy. This book explores first principles, including managing short-term policy trade-offs. The book also outlines efficient operational procedures and reviews the experiences of Canada, the Czech Republic, and India.
The analysis highlights the need for assertive policies and maximum transparency. The Time Inconsistency of Delegation-Based Time Inconsistency Solutions in Monetary Policy Article in Journal of Optimization Theory and Applications (3) September with 33 Reads.
The time-inconsistency problem arises in the context of monetary policy, because there is a temptation to give a short-run boost to economic output and employment by pursuing a course of policy that is more expansionary than firms or workers had initially expected.
5 Nevertheless, if the economy is already at full employment, then this boost is. The time‐consistent discretionary solution reduces to a period‐by‐period optimization of the loss function, that is: 4 Minimizing then (4) subject to (1) gives the familiar monetary policy reaction functions for output and inflation, respectively: 5 6 Representation (6) is of a structural form in the sense that expectations are not.
In economics, dynamic inconsistency or time inconsistency is a situation in which a decision-maker's preferences change over time in such a way that a preference can become inconsistent at another point in time.
This can be thought of as there being many different "selves" within decision makers, with each "self" representing the decision-maker at a different point in time; the inconsistency.
Parents, like governments, establish credibility by seeing to it that their “policies” (the rules that they outline for their children) are time consistent.
Analyze the potential for time consistency of these rules: a. 1f you don’t eat the squash, you’ll go to bed 30 minutes early tonight. Reference • J. Benhabib, S. Schmitt‐Grohe, M. Uribe,Monetary Policy and Multiple Equilibria, Amer.
Econ. Rev. 91, – • Chang, K. L.; N. Chen. The Federal Reserve Board of Governors in Washington DC. Abstract: Since the beginning ofthe United States has undertaken unprecedented tariff increases, with one goal of these actions being to boost the manufacturing sector.
In this paper, we estimate the effect of the tariffs—including retaliatory tariffs by U.S. trading partners—on manufacturing employment, output, and producer. Formerly, the monetary aggregates helped to assure that monetary policy was anchored to low inflation and was "time consistent," but these roles have not as yet been filled by other variables or changes in procedures.
Several proposals address these gaps in our practices, but our knowledge is insufficient to make a selection. “Expectations, Credibility, and Time-Consistent Monetary Policy,” Macroeconomic Dynamics, December “Interest Rates, Inflation, and Federal Reserve Policy Since ,” Journal of Money, Credit, and Banking, August “Does the Time-Consistency Problem Explain the Behavior of.
Central Bank Behavior and the Strategy of Monetary Policy * present paper. We use a simple case study methodology to analyze the conduct and performance of monetary policy in six industrialized countries for the period from the breakup of the Bretton Woods system until the by: monetary policy scenario of the Philippines.
Issues on Monetary Policy Efficiency Although monetarism is as alive and well as ever, considerable skepticism and contrary opinions can be found that surprisingly echoes the vital flaw in human reasoning: expectations. The twin realization that it is impossible to observe expectations directly,File Size: KB.In this book David Currie and Paul Levine address a broad range of issues concerning the design and conduct of macroeconomic policy in open economies.
Adopting neo-Keynesian models for which monetary and fiscal policy have short-term real effects, they analyse active stabilisation policies in both a single- and multi-country context. Questions addressed include: the merits of simple policy.