The Case for Price Stability

Goodfriend, Marvin; King, Robert G.

doi:10.2139/ssrn.2182231

Cited by 62 publications

(101 citation statements)

References 16 publications

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“…For more details, see www.frbsf.org/education/activities/drecon/9803.html. 2 See Clarida, Galí, and Gertler (1999), Goodfriend and King (2001), and Giannoni and Woodford (2003) for the canonical and widely cited examples of tractable new Keynesian/classical models that yield Taylor rule-like reaction functions from theoretically appealing underlying assumptions. 3 Taylor himself acknowledged this issue, arguing instead for money supply rules in a deflationary environment (Taylor 1997).…”

Section: The Trouble With Taylor Rules In Low-inflation Environmentsmentioning

confidence: 99%

The difficulty of discerning what’s too tight: Taylor rules and Japanese monetary policy

Kuttner

Posen

2004

The North American Journal of Economics and Finance

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Section: The Trouble With Taylor Rules In Low-inflation Environmentsmentioning

confidence: 99%

The difficulty of discerning what’s too tight: Taylor rules and Japanese monetary policy

Kuttner

Posen

2004

The North American Journal of Economics and Finance

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“…Such a policy has been shown to be optimal in the standard New Keynesian model (see e.g. King, 2001, and. By comparing both policies, we can illustrate the trade-o¤s that render in ‡ation targeting suboptimal in this framework.…”

Section: Impulse-response Analysismentioning

confidence: 95%

“…y t . Total demand from …nal good producers equals R 1 0 y f t (j)dj, where each …rm's demand is given by (13). Equilibrium in the intermediate good market therefore requires…”

Section: Market Clearingmentioning

confidence: 99%

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Banking Competition, Collateral Constraints and Optimal Monetary Policy

2010

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We analyze optimal monetary policy in a model with two distinct …nancial frictions.First, borrowing is subject to collateral constraints. Second, credit ‡ows are intermediated by monopolistically competitive banks, thus giving rise to endogenous lending spreads.We show that, up to a second order approximation, welfare maximization is equivalent to stabilization of four goals: in ‡ation, output gap, the consumption gap between constrained and unconstrained agents, and the distribution of the collateralizable asset between both groups. Following both productivity and …nancial shocks, the optimal monetary policy commitment implies a short-run trade-o¤ between stabilization goals. Such policy tradeo¤s become ampli…ed as banking competition increases, due to the fall in lending spreads and the resulting increase in …nancial leveraging.

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“…The first is certainly analytical convenience. The second is that zero inflation is argued to be optimal in a so-called cashless economy where relative price dispersion is the only distortion (see Goodfriend andKing, 2001, andWoodford, 2003). The theoretical assumptions needed for the optimality of zero inflation in the long-run are however quite special, such that generally that would not be the case.…”

Section: Introductionmentioning

confidence: 99%