Roberts, John M (2006): Monetary Policy and Inflation Dynamics. Published in: International Journal of Central Banking , Vol. Volume, No. Number 3 (14. September 2006): pp. 193-230.
Download (460kB) | Preview
Since the early 1980s, the U.S. economy has changed in some important ways: inflation now rises considerably less when unemployment is low, and the volatility of output and inflation have fallen sharply. This paper examines whether changes in monetary policy can account for these changes in the economy. The results suggest that changes in monetary policy can account for most or all of the change in the inflationunemployment relationship. In addition, changes in policy can explain a large proportion of the reduction in the volatility of the output gap.
|Item Type:||MPRA Paper|
|Original Title:||Monetary Policy and Inflation Dynamics|
|Subjects:||G - Financial Economics > G0 - General > G00 - General
G - Financial Economics > G0 - General
|Depositing User:||Terry Woodard|
|Date Deposited:||14. Nov 2006|
|Last Modified:||23. Feb 2015 12:37|
Ahmed, S., A. Levin, and B. A. Wilson. 2004. “Recent U.S. Macroeconomic Stability: Good Policies, Good Practices, or Good Luck?” Review of Economics and Statistics 86 (3): 824–32.
Amato, J. D., and T. Laubach. 2004. “Implications of Habit Formation for Optimal Monetary Policy.” Journal of Monetary Economics 51 (2): 305–25.
Atkeson, A., and L. H. Ohanian. 2001. “Are Phillips Curves Useful for Forecasting Inflation?” Federal Reserve Bank of Minneapolis Quarterly Review 25 (1): 2–11.
Ball, L. 2000. “Near-Rationality and Inflation in Two Monetary Regimes.” NBER Working Paper No. 7988 (October).
Ball, L., N. G. Mankiw, and D. Romer. 1988. “New Keynesian Economics and the Output-Inflation Trade-Off.” Brookings Papers on Economic Activity 1:1–82.
Blanchard, O., and J. Simon. 2001. “The Long and Large Decline in U.S. Output Volatility.” Brookings Papers on Economic Activity 1:135–64.
Boivin, J., and M. Giannoni. Forthcoming. “Has Monetary Policy Become More Effective?” Review of Economics and Statistics 88.
Brayton, F., E. Mauskopf, D. Reifschneider, P. Tinsley, and J. C. Williams. 1997. “The Role of Expectations in the FRB/US Macroeconomic Model.” Federal Reserve Bulletin 83 (April): 227–24.
Christiano, L. J., M. Eichenbaum, and C. L. Evans. 2005. “Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy.” Journal of Political Economy 113 (1): 1–45.
Clarida, R., J. Gal´ı, and M. Gertler. 2000. “Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory.” Quarterly Journal of Economics 115 (1): 147–80.
Congressional Budget Office. 2001. CBO’s Method for Estimating Potential GDP, available at www.cbo.gov.
English, W. B., W. R. Nelson, and B. P. Sack. 2003. “Interpreting the Significance of Lagged Interest Rates in Estimated Monetary Policy Rules.” Contributions to Macroeconomics 3 (1).
Friedman, M. 1968. “Inflation: Causes and Consequences.” In Dollars and Deficits: Living with America’s Economic Problems, 21–60. Englewood Cliffs, NJ: Prentice-Hall. Fuhrer, J., and G. Moore. 1995. “Inflation Persistence.” Quarterly Journal of Economics 110 (1): 127–59.
Gordon, R. J. 1980. “A Consistent Characterization of a Near-Century of Price Behavior.” American Economic Review 70 (2): 243–49.
Levin, A. T., V. Wieland, and J. C. Williams. 1999. “Robustness of Simple Monetary Rules under Model Uncertainty.” In Monetary Policy Rules, ed. J. B. Taylor. Chicago: University of Chicago Press.
Lucas, R. E. 1975. “Econometric Policy Evaluation: A Critique.” Carnegie-Rochester Conference Series 1:19–46.
Mankiw, N. G., and R. Reis. 2002. “Sticky Information versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve.” Quarterly Journal of Economics 117 (4): 1295–1328.
McConnell, M. M., and G. Perez-Quiros. 2000. “Output Fluctuations in the United States: What Has Changed Since the Early 1980s?” American Economic Review 90 (5): 1464–76.
Orphanides, A. 2001. “Monetary Policy Rules Based on Real-Time Data.” American Economic Review 91 (4): 964–85.
Orphanides, A., R. D. Porter, D. Reifschneider, R. Tetlow, and F. Finan. 2000. “Errors in the Measurement of the Output Gap and the Design of Monetary Policy.” Journal of Economics and Business 52 (1–2): 117–41.
Reifschneider, D., R. Tetlow, and J. C. Williams. 1999. “Aggregate Disturbances, Monetary Policy, and the Macroeconomy: The FRB/US Perspective.” Federal Reserve Bulletin 85 (January): 1–19.
Roberts, J. M. 1995. “New Keynesian Economics and the Phillips Curve.” Journal of Money, Credit, and Banking 27:975–84.
———. 2004. “Monetary Policy and Inflation Dynamics.” Federal Reserve Board Finance and Economic Discussion Series Paper No. 2004-62 (October).
Rotemberg, J. J., and M. J. Woodford. 1997. “An Optimization-Based Econometric Framework for the Evaluation of Monetary Policy.” In NBER Macroeconomics Annual 1997, ed. B. S. Bernanke and J. J. Rotemberg, 297–345. Cambridge, MA: MIT Press.
Rudebusch, G. D. 2005. “Assessing the Lucas Critique in Monetary Policy Models.” Journal of Money, Credit, and Banking 37 (2): 245–72.
Staiger, D., J. H. Stock, and M. W. Watson. 2001. “Prices, Wages, and the U.S. NAIRU in the 1990s.” In The Roaring Nineties: Can Full Employment Be Sustained? ed. A. B. Krueger and R. M.Solow, 3–60. New York: Russell Sage Foundation.
Stock, J. H., and M. W. Watson. 2002. “Has the Business Cycle Changed and Why?” In NBER Macroeconomics Annual, ed.M. Gertler and K. Rogoff, 159–218. Cambridge, MA: MIT Press.
Taylor, J. B. 1979. “Estimation and Control of a Macroeconomic Model with Rational Expectations.” Econometrica 47 (5): 1267–86.
———. 1999. “A Historical Analysis of Monetary Policy Rules.”In Monetary Policy Rules, ed. J. B. Taylor, 319–41. Chicago: University of Chicago Press.