Optimal Monetary Policy and Term Structure in a Continuous-Time DSGE Model

2016 ◽  
Author(s):  
Haitao Li ◽  
Tao Li
Keyword(s):  
Monetary Policy ◽  
Term Structure ◽  
Continuous Time ◽  
Optimal Monetary Policy ◽  
Dsge Model

scholarly journals Optimal Monetary Policy in an Operational Medium-Sized DSGE Model

2011 ◽  
Vol 43 (7) ◽  
pp. 1287-1331 ◽  
Author(s):  
MALIN ADOLFSON ◽  
STEFAN LASÉEN ◽  
JESPER LINDÉ ◽  
LARS E.O. SVENSSON
Keyword(s):  
Monetary Policy ◽  
Optimal Monetary Policy ◽  
Dsge Model

scholarly journals Optimal Monetary Policy in an Operational Medium-Sized DSGE Model

2009 ◽  
Author(s):  
Malin Adolfson ◽  
Stefan Laseen ◽  
Jesper Linde ◽  
Lars E. O. Svensson
Keyword(s):  
Monetary Policy ◽  
Optimal Monetary Policy ◽  
Dsge Model

scholarly journals Optimal Monetary Policy in an Operational Medium-Sized DSGE Model

2010 ◽  
Vol 2010 (1023) ◽  
pp. 1-46
Author(s):  
Malin Adolfson ◽  
◽  
Stefan Laséen ◽  
Jesper Lindé ◽  
Lars E.O. Svensson
Keyword(s):  
Monetary Policy ◽  
Optimal Monetary Policy ◽  
Dsge Model

scholarly journals INFLATION RISK AND OPTIMAL MONETARY POLICY

2009 ◽  
Vol 13 (S1) ◽  
pp. 58-75 ◽  
Author(s):  
William T. Gavin ◽  
Benjamin D. Keen ◽  
Michael R. Pakko
Keyword(s):  
Monetary Policy ◽  
Term Structure ◽  
New Keynesian ◽  
Optimal Monetary Policy ◽  
Monetary Policies ◽  
Inflation Risk ◽  
Long Run ◽  
Order Of Magnitude ◽  
New Keynesian Models ◽  
Sticky Wages

This paper shows that the optimal monetary policies recommended by New Keynesian models still imply a large amount of inflation risk. We calculate the term structure of inflation uncertainty in New Keynesian models when the monetary authority adopts the optimal policy. When the monetary policy rules are modified to include some weight on a price path, the economy achieves equilibria with substantially lower long-run inflation risk. With either sticky prices or sticky wages, a price path target reduces the variance of inflation by an order of magnitude more than it increases the variability of the output gap.

scholarly journals An optimal control problem of monetary policy

2021 ◽  
Vol 26 (11) ◽  
pp. 5769
Author(s):  
Andrea Bacchiocchi ◽  
Germana Giombini
Keyword(s):  
Optimal Control ◽  
Monetary Policy ◽  
Interest Rate ◽  
Optimal Control Problem ◽  
Continuous Time ◽  
Phillips Curve ◽  
Optimal Monetary Policy ◽  
Trade Off ◽  
Long Run ◽  
The Interest Rate

<p style='text-indent:20px;'>This paper analyses an optimal monetary policy under a non-linear Phillips curve and linear GDP dynamics. A central bank controls the inflation and the GDP trends through the adjustment of the interest rate to prevent shocks and deviations from the long-run optimal targets. The optimal control path for the monetary instrument, the interest rate, is the result of a dynamic minimization problem in a continuous-time fashion. The model allows considering various economic dynamics ranging from hyperinflation to disinflation, sustained growth and recession. The outcomes provide useful monetary policy insights and reveal the dilemma between objectives faced by the monetary authority in trade-off scenarios.</p>

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