Unconventional Policy Instruments in the New Keynesian Model /

Unconventional Policy Instruments in the New Keynesian Model /

This paper analyzes the use of unconventional policy instruments in New Keynesian setups in which the 'divine coincidence' breaks down. The paper discusses the role of a second instrument and its coordination with conventional interest rate policy, and presents theoretical results on equil...

Descripció completa

Dades bibliogràfiques
Autor principal: Alla, Zineddine
Altres autors: Espinoza, Raphael, Ghosh, Atish
Format: Revista
Idioma:English
Publicat: Washington, D.C. : International Monetary Fund, 2016.
Col·lecció:IMF Working Papers; Working Paper ; No. 2016/058
Accés en línia:Full text available on IMF
LEADER 02220cas a2200265 a 4500
001 AALejournalIMF016690
008 230101c9999 xx r poo 0 0eng d
020 |c 5.00 USD 
020 |z 9781513573038 
022 |a 1018-5941 
040 |a BD-DhAAL  |c BD-DhAAL 
100 1 |a Alla, Zineddine. 
245 1 0 |a Unconventional Policy Instruments in the New Keynesian Model /  |c Zineddine Alla, Raphael Espinoza, Atish Ghosh. 
264 1 |a Washington, D.C. :  |b International Monetary Fund,  |c 2016. 
300 |a 1 online resource (34 pages) 
490 1 |a IMF Working Papers 
500 |a <strong>Off-Campus Access:</strong> No User ID or Password Required 
500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
506 |a Electronic access restricted to authorized BRAC University faculty, staff and students 
520 3 |a This paper analyzes the use of unconventional policy instruments in New Keynesian setups in which the 'divine coincidence' breaks down. The paper discusses the role of a second instrument and its coordination with conventional interest rate policy, and presents theoretical results on equilibrium determinacy, the inflation bias, the stabilization bias, and the optimal central banker's preferences when both instruments are available. We show that the use of an unconventional instrument can help reduce the zone of equilibrium indeterminacy and the volatility of the economy. However, in some circumstances, committing not to use the second instrument may be welfare improving (a result akin to Rogoff (1985a) example of counterproductive coordination). We further show that the optimal central banker should be both aggressive against inflation, and interventionist in using the unconventional policy instrument. As long as price setting depends on expectations about the future, there are gains from establishing credibility by using any instrument that affects these expectations. 
538 |a Mode of access: Internet 
700 1 |a Espinoza, Raphael. 
700 1 |a Ghosh, Atish. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2016/058 
856 4 0 |z Full text available on IMF  |u http://elibrary.imf.org/view/journals/001/2016/058/001.2016.issue-058-en.xml  |z IMF e-Library 

Ítems similars