scholarly journals 2. A Positive Theory of Monetary Policy in a Natural Rate Model

1990 ◽  
pp. 29-51
Keyword(s):  
Monetary Policy ◽  
Rate Model ◽  
Positive Theory ◽  
Natural Rate

scholarly journals A Positive Theory of Monetary Policy in a Natural Rate Model

1983 ◽  
Vol 91 (4) ◽  
pp. 589-610 ◽  
Author(s):  
Robert J. Barro ◽  
David B. Gordon
Keyword(s):  
Monetary Policy ◽  
Rate Model ◽  
Positive Theory ◽  
Natural Rate

Brazil: monetary policy and the neutral interest rate

2016 ◽  
Vol 43 (6) ◽  
pp. 966-979
Author(s):  
Cleomar Gomes da Silva ◽  
Rafael Cavalcanti de Araújo
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Real Interest Rate ◽  
Design Methodology ◽  
Macroeconomic Model ◽  
Natural Rate ◽  
Content Type ◽  
Natural Rate Of Interest ◽  
The Interest Rate ◽  
Definition Of

Purpose The purpose of this paper is to analyze the conduct of monetary policy in Brazil and estimate the country’s neutral real interest rate. Design/methodology/approach The authors make use of a state-space macroeconomic model representation. Findings The period of analysis goes from 2003 up to the end of 2013 and the results show that the country’s natural rate of interest was around 4.2 percent in December 2013. Originality/value One of the main differences of this work is the inclusion of variables such as the real exchange rate and world interest rate. This is important because these variables play an important role in the definition of the interest rate and, consequently, in the definition of the neutral interest rate.

scholarly journals Dynamic Debt Deleveraging and Optimal Monetary Policy

2020 ◽  
Vol 12 (2) ◽  
pp. 310-350 ◽  
Author(s):  
Pierpaolo Benigno ◽  
Gauti B. Eggertsson ◽  
Federica Romei
Keyword(s):  
Monetary Policy ◽  
Lower Bound ◽  
New Keynesian ◽  
New Keynesian Model ◽  
Optimal Monetary Policy ◽  
Natural Rate ◽  
Keynesian Model ◽  
Natural Rate Of Interest ◽  
Standard Framework

This paper proposes a postcrisis New Keynesian model that incorporates agent heterogeneity in borrowing and lending with a minimum set of assumptions. Unlike the standard framework, this model makes the natural rate of interest endogenous and dependent on macroeconomic policy. The main application is to study optimal monetary policy at the zero lower bound (ZLB). Such policy succeeds in raising the natural rate of interest by creating an environment that speeds up deleveraging and thus endogenously shortens the crisis and the duration of binding ZLB. Inflation should be front-loaded and should overshoot its long-term target during the ZLB episode. (JEL E12, E31, E32, E43, E52)

scholarly journals Choosing the Federal Reserve Chair: Lessons from History

2004 ◽  
Vol 18 (1) ◽  
pp. 129-162 ◽  
Author(s):  
Christina D Romer ◽  
David H Romer
Keyword(s):  
Monetary Policy ◽  
Federal Reserve ◽  
Capacity Utilization ◽  
Natural Rate ◽  
Monetary Policies ◽  
Policy Success ◽  
Natural Rate Of Unemployment ◽  
Low Levels ◽  
1960S And 1970S ◽  
Major Section

This paper demonstrates that the key determinants of policy success have been policymakers' views about how the economy works and what monetary policy can accomplish. In the first major section of the paper, the authors analyze the narrative record of the Federal Reserve to discover what policymakers believed and why they chose the policies they did. The authors find that the well-tempered monetary policies of the 1950s and of the 1980s and 1990s stemmed from a conviction that inflation has high costs and few benefits, together with realistic views about the sustainable level of unemployment and the determinants of inflation. In contrast, the profligate policies of the late 1960s and 1970s stemmed initially from a belief in a permanent tradeoff between inflation and unemployment, and later from a natural rate framework with a highly optimistic estimate of the natural rate of unemployment and a highly pessimistic estimate of the sensitivity of inflation to economic slack. And the deflationary policies of the late 1930s stemmed from a belief that the economy could overheat at low levels of capacity utilization and that monetary ease could do little to stimulate a depressed economy.

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