Interest rate rules, inflation and the Taylor principle: an analytical exploration

Bénassy, Jean‐Pascal

doi:10.1007/s00199-004-0551-z

Cited by 8 publications

(3 citation statements)

References 28 publications

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“…Thus 'market' prices are never supporting Walrasian equilibria in the traditional meaning. Individual markets can balance excess demand and excess supply (for a macro-economic perspective, see Bénassy 2006). 4 Electricity provision is an example of the 'no exit constraint'.…”

Section: The Drèze-stern Social Cost-benefit Settingmentioning

confidence: 99%

Public enterprises, planning and policy adoption: three welfare propositions

Bo¹,

Florio²

2012

Journal of Economic Policy Reform

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Despite widespread privatizations over the last three decades, public enterprises, as production units under government control, are still present in several countries and sectors. While the academic and political debate on the costs and benefits of privatization is vast, a focus on the rationale for public enterprises, from the standpoint of Social Cost Benefit Analysis, is missing. This paper aims at filling this gap and provides a normative discussion on public enterprises in a general equilibrium setting. The conditions under which public provision may be beneficial and the metrics for evaluating polices and projects under (a)symmetric information and (non)benevolent governments are presented in three welfare propositions. The main policy message points to the overall quality of institutions as a necessary pre-condition for socially desirable public enterprises. A sound institutional environment provides policy-makers with the correct incentives to design and implement meaningful policies even if public administrators adopt sub-optimal plans. Institutions should constrain self-interested policy-makers from disrupting the key welfare signals for policy adoption as well as for project appraisal, while bias in management is a relatively less important concern.

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Section: The Drèze-stern Social Cost-benefit Settingmentioning

confidence: 99%

Public enterprises, planning and policy adoption: three welfare propositions

Bo¹,

Florio²

2012

Journal of Economic Policy Reform

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“…Generally speaking, to the extent that lower real interest rates stimulate economic activity and inflation, if 1 β > , interest rate rules will tend to be stable, while if 1 β < , interest rate rules are expected to be unstable. Benassy (2006) constructed a dynamic stochastic general equilibrium model to get an optimal interest rule, and found that elasticity of response depends on several factors, such as the degree of price rigidity, the autocorrelation of the underlying shocks, or which measure of inflation is used. In general, the optimal elasticity of the interest rate with respect to inflation needs not to be greater than 1, that is 1…”

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confidence: 99%

“…China Inter-bank Offered Rate: 1994-2006 measure of historical analysis. In the historical analysis, we choose the data of CPI from 1994 to 2006 to calculate the inflation rate, the mean of which is 4.5%, and the median is 1.4%.…”

mentioning

confidence: 99%

The Taylor rules and macroeconomic fluctuation in China: 1994–2006

Li¹,

Wang²

2010

Front. Econ. China

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Forecast combination, non-linear dynamics, and the macroeconomy

Gibbs

2016

Econ Theory

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This paper introduces the concept of a Forecast Combination Equilibrium to model boundedly rational agents who combine a menu of different forecasts using insights from the forecasting literature to mimic the behavior of actual forecasters. The equilibrium concept is consistent with rational expectations under certain conditions, while also permitting multiple, distinct, self-fulfilling equilibria, many of which are stable under least squares learning. The equilibrium concept is applied to a simple Lucas-type monetary model where agents engage in constant gain learning. The combination of multiple equilibria and learning is sufficient to replicate some key features of inflation data, such as time-varying volatility and periodic bouts of high inflation or deflation in a model that experiences only i.i.d. random shocks.

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Interest rate rules, inflation and the Taylor principle: an analytical exploration

Cited by 8 publications

References 28 publications

Public enterprises, planning and policy adoption: three welfare propositions

Public enterprises, planning and policy adoption: three welfare propositions

The Taylor rules and macroeconomic fluctuation in China: 1994–2006

Forecast combination, non-linear dynamics, and the macroeconomy

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