Bargaining for the choice of monetary policy instruments in a simple stochastic macro model

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Centre for Economic Policy Research , London
Foreign exchange -- Mathematical models., Monetary policy -- Mathematical mo
StatementMartin Klein.
SeriesDiscussion paper series / Centre for Economic Policy Research -- no.553
ContributionsCentre for Economic Policy Research.
The Physical Object
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Open LibraryOL19101278M

Bargaining for the Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model. By Martin Klein. It is argued that a fixed exchange rate system in which the bargaining solution requires an asymmetric allocation of intervention duties cannot be an intermediate phase in the transition towards a monetary ning Author: Martin Klein.

No abstract is available for this item. William Poole, "Optimal choice of monetary policy instruments in a simple stochastic macro model," Staff Stud Board of Governors of the Federal Reserve System (U.S.).Handle: RePEc:fip:fedgss It has been nearly twenty years since Poole () wrote his classic article on the optimal choice of monetary policy instruments in a stochastic IS-LM model.

Poole assumed that the monetary authority (henceforth called the Fed) can control the interest rate or the money supply exactly. These are the two "instruments" of monetary policy.

The Optimal Choice of Monetary Policy Instruments in a Simple Macro Model. Quarterly Journal of Economics, 84, ], studies how differently monetary and fiscal shocks influence the.

Downloadable (with restrictions). This paper, in the spirit of Poole [Poole, William, The Optimal Choice of Monetary Policy Instruments in a Simple Macro Model. Quarterly Journal of Economics, 84, ], studies how differently monetary and fiscal shocks influence the appropriate choice of the monetary policy regime.

Velocity shocks are introduced by embedding a stochastic cash-in. William Poole, "Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model," The Quarterly Journal of Economics, Oxford University Press, vol.

84(2), pages Calvo, Guillermo A., "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages The instruments of monetary policy are also called as “weapons of monetary policy”.

These instruments can be categorized as: Quantitative Measures: These are the traditional measures of monetary control. All the quantitative methods affect the entire credit market in the same direction. This means their impact on all the sectors of the. Abstract.

The term monetary policy refers to actions taken by central banks to affect monetary and other financial conditions in pursuit of the broader objectives of sustainable growth of real output, high employment, and price stability.

The average rate of growth of the stock of money in circulation has been viewed for centuries as the decisive determinant of overall price trends in the long. Poole, William, "Optimal choice of monetary policy instrument in a simple stochastic macro model," Quarterly Journal of Economics 84 (), Rogoff, Kenneth, "The optimal degree of commitment to an intermediate monetary target," Quarterly Journal.

Monetary policy affects aggregate demand and inflation through a variety of channels. Adverse shocks, such as an oil price increase, can lead to higher unemployment and higher inflation. Many governments have given responsibility for monetary policy—often described as inflation targeting—to central banks.

Poole, W. () ‘Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model’, Quarterly Journal of Economics, pp.

Google Scholar Roper, D.

Download Bargaining for the choice of monetary policy instruments in a simple stochastic macro model PDF

and S. Turnovsky () ‘Optimal Exchange Market Intervention in a Simple Stochastic Macro Model’, Canadian Journal of Economics. Google Scholar. [2] W. Poole, “ Optimal choice of monetary policy instruments in a simple stochastic macro model, ” The Quarter ly Journal of Economics, vol. 84, no. 2, pp. –, This chapter concerns the macroeconomic effects, how the monetary system is altered and how the central bank, the Federal Reserve System in the United States, can and should operate in the new environment.

Monetary policy is the government’s principal instrument for. William Poole, "Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model," The Quarterly Journal of Economics, Oxford University Press, vol.

84(2), pages Benigno, Gianluca & Benigno, Pierpaolo, Under the instrument rule, Guender () proposed a simple stochastic macroeconomic model and examines the optimal setting of the policy parameter under inflation targeting.

The optimal value for. Abstract. The role of monetary policy has always held a central role in the theory and practice of macroeconomic stabilization.

In the two decades following the Second World War, most stabilization analysis centered on the acceptance of a particular model of economic behavior, usually some variant of the Keynesian ISLM framework, with uncertainty playing little role.

One key issue for simple policy rules is the appropriate measure of inflation to include in the rule. In many models (Levin et al.,Levin et al., ), simple rules that respond to smoothed inflation rates such as the one-year rate typically perform better than those that respond to the one-quarter inflation rate, even though the objective is to stabilize the one-quarter rate.

The inflation targeting process relies heavily on the use of macroeconomic models. In those models the central bank behavior is usually described by a simple policy instrument, the so called. Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model.

Details Bargaining for the choice of monetary policy instruments in a simple stochastic macro model PDF

Quarterly Journal of Economics 84 (2): – Poole, William. Comment. In Inflation, Unemployment, and Monetary Policy, eds. Robert M. Solow and John B. Taylor, 78 – Cambridge, MA: MIT Press.

Simons, Henry C. Rules versus Authorities in.

Description Bargaining for the choice of monetary policy instruments in a simple stochastic macro model EPUB

"Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model," Quarterly Journal of Economics, vol. 84 (May), pp.

_____ (). "Rules-of-Thumb for Guiding Monetary Policy," in Open Market Policies and Operating Procedures--Staff Studies. Washington: Board of Governors of the Federal Reserve System, pp.

Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model,” (). Optimal Commitment in Monetary Policy: Credibility versus Flexibility”. Optimal choice of monetary policy instruments in a simple stochastic macro model”, ().

Recent trends in monetary policy implementation: a view from the desk”, Federal Reserve Bank of New York Economic Policy Review. Carnegie-Rochester Conference Series on Public Policy. Volume 7,Pages Control theory and economic stabilization: A comment on.

Phelps, E.S., and Taylor, J. (), “Stabilizing Powers of Monetary Policy under Rational Expectations,” Journal of Political Economy, Poole, W. “Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model,”. The only monetary policy target the Fed can choose is the money supply.

The only monetary policy target the Fed can choose is the interest rate. The Fed could simultaneously choose an interest rate and the money supply as its monetary policy targets. The Fed is forced to choose between the interest rate and the money supply as its.

Monetary Policy A central bank's changing of the money supply to influence interest rates and thus the total level of spending in the economy to assist the economy in achieving price stability, full employment, and economic growth.

Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model. Article. Feb I. Introduction, — II. The instrument problem, — III. A static stochastic. This is a book in monetary theory, and more care should be taken in calibrating the monetary side of the economy.

Optimal choice of monetary policy instruments in a simple stochastic macro model. Quarterly Journal of Economics 84(2) Timothy S.

Fuerst Bowling Green State University COPYRIGHT Southern Economic Association No. Using a three countries model with flexible exchange rates, this study tries to analyze the situation in an asymmetric monetary area around a big country.

The model consider a stochastic framework where the monetary policy is used to stabilize the inflation and the current account.

The monetary policy works through the exchange rate and the interdependence is a consequence of the exchange. This tutorial complements the book Monetary policy operations and the financial system for Q Poole (, ^Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model, Quarterly Journal of Economics, 84, –) defined an instrument to be a policy variable.

Basic Book Inc., New York () Google Scholar. Finn, W. PooleOptimal choice of monetary policy instruments in a simple stochastic macro model. Quarterly Journal of Economics, 84 (), pp. Google Scholar. Rotemberg and Woodford, outlook and its interaction with policy.3 We work with a small model in order to make the transmission mechanism of monetary policy, whose basic contours our model shares with most DSGE specifications, as transparent as possible.

Therefore, the model focuses on the behavior of only three major macroeconomic variables. Virtually all of the econometric work on monetary policy evaluation assumes that the policy makers do not change the policy rule.

5. A simple representative model. It is helpful to examine a simple model which is both an example of, and representative of the.