Trend Growth and Robust Monetary Policy

2020 ◽  
Author(s):  
Kohei Hasui
Keyword(s):  
Monetary Policy ◽  
Trend Growth

A NOTE ON TREND GROWTH, UNEMPLOYMENT, AND OPTIMAL MONETARY POLICY

2018 ◽  
Vol 23 (4) ◽  
pp. 1703-1719
Author(s):  
Wolfgang Lechthaler ◽  
Mewael F. Tesfaselassie
Keyword(s):  
Monetary Policy ◽  
Labor Market ◽  
Interest Rate ◽  
Nominal Interest Rate ◽  
Price Stability ◽  
Optimal Monetary Policy ◽  
Search And Matching ◽  
Trend Growth

We analyze the implications of trend growth for optimal monetary policy in the presence of search and matching unemployment. We show that trend growth interacts importantly with the inefficiencies stemming from the labor market. Higher trend growth exacerbates the inefficiencies of the labor market and therefore calls for larger deviations from price stability. Our analysis implies that lower trend growth reduces not only the level but also the optimal volatility of the nominal interest rate.

A NOTE ON TREND GROWTH AND LEARNING ABOUT MONETARY POLICY RULES IN A TWO-BLOCK WORLD ECONOMY

2015 ◽  
Vol 21 (1) ◽  
pp. 243-258
Author(s):  
Eric Schaling ◽  
Mewael F. Tesfaselassie
Keyword(s):  
Monetary Policy ◽  
Rational Expectations ◽  
World Economy ◽  
New Keynesian ◽  
Policy Rules ◽  
Monetary Policy Rules ◽  
Elasticity Of Intertemporal Substitution ◽  
Keynesian Model ◽  
Long Run ◽  
Trend Growth

We analyze the implications of openness and growth for determinacy and learnability of rational expectations equilibria in a two-country New Keynesian model with alternative monetary policy rules. Under the contemporaneous data rule, the conditions for determinacy and learnability become more stringent as a result of openness but less stringent as a result of growth, so that growth weakens the effect of openness. Under the expectations-based rule, the conditions for determinacy and learnability also become more stringent as a result of openness, whereas as a result of trend growth the conditions for determinacy also become more stringent (thus reinforcing the effect of openness) but those for learnability become less stringent (thus weakening the effect of openness). As in related studies, the elasticity of intertemporal substitution is key to our result, but within a framework that is consistent with long-run labor supply and balanced growth facts.

scholarly journals Trend growth and learning about monetary policy rules

2014 ◽  
Vol 41 ◽  
pp. 241-256 ◽  
Author(s):  
Mewael F. Tesfaselassie
Keyword(s):  
Monetary Policy ◽  
Policy Rules ◽  
Monetary Policy Rules ◽  
Trend Growth

Trend Growth and Robust Monetary Policy

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Kohei Hasui
Keyword(s):  
Monetary Policy ◽  
Robust Control ◽  
Control Problem ◽  
Productivity Growth ◽  
Model Uncertainty ◽  
Macroeconomic Fluctuations ◽  
Policy Studies ◽  
Trend Growth

AbstractRecent monetary policy studies have shown that the trend productivity growth has non-trivial implications for monetary policy. This paper investigates how trend growth alters the effect of model uncertainty on macroeconomic fluctuations by introducing a robust control problem. We show that an increase in trend growth reduces the effect of the central bank’s model uncertainty and, hence, mitigates the large macroeconomic fluctuations. Moreover, the increase in trend growth contributes to bringing the economy into determinacy regions even if larger model uncertainty exists. These results indicate that trend growth contributes to stabilizing the economy in terms of both variance and determinacy when model uncertainty exists.

Trend growth and optimal monetary policy

2010 ◽  
Vol 32 (3) ◽  
pp. 797-815 ◽  
Author(s):  
Fabrizio Mattesini ◽  
Salvatore Nisticò
Keyword(s):  
Monetary Policy ◽  
Optimal Monetary Policy ◽  
Trend Growth

Imperfect Knowledge and Monetary Policy

2006 ◽  
Author(s):  
Vítor Gaspar ◽  
Otmar Issing ◽  
Oreste Tristani ◽  
David Vestin
Keyword(s):  
Monetary Policy ◽  
Imperfect Knowledge

Monetary Policy

2010 ◽  
Author(s):  
Michael D. Bordo ◽  
David C. Wheelock
Keyword(s):  
Monetary Policy

The use of reserve requirements in an optimal monetary policy framework

10.32468/be.0 ◽  
2012 ◽  
Author(s):  
Hernando Vargas-Herrera ◽  
Pamela Andrea Cardozo-Ortiz
Keyword(s):  
Monetary Policy ◽  
Policy Framework ◽  
Optimal Monetary Policy ◽  
Reserve Requirements ◽  
Monetary Policy Framework
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