Optimal Monetary Policy with r*<0 Article Swipe
YOU?
·
· 2023
· Open Access
·
· DOI: https://doi.org/10.3386/w31508
We study the optimal monetary policy problem in a New Keynesian economy with a zero lower bound (ZLB) on the nominal interest rate, when the steady state natural rate (r*) becomes permanently negative.We show that the optimal policy aims to approach gradually a new steady state with positive average inflation.Around that steady state, the optimal policy implies well defined (second-best) paths for inflation and output in response to shocks to the natural rate.Under plausible calibrations, the optimal policy implies that the nominal rate remains at its ZLB most of the time.Despite the latter feature, the central bank can implement the optimal outcome as a unique equilibrium by means of an appropriate nonlinear interest rate rule.In order to establish that result, we derive sufficient conditions for local determinacy in a general model with endogenous regime switches.
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- Type
- report
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- Landing Page
- https://doi.org/10.3386/w31508
- https://doi.org/10.3386/w31508
- OA Status
- gold
- References
- 46
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- OpenAlex ID
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Raw OpenAlex JSON
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https://openalex.org/W4385521267Canonical identifier for this work in OpenAlex
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https://doi.org/10.3386/w31508Digital Object Identifier
- Title
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Optimal Monetary Policy with r*<0Work title
- Type
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reportOpenAlex work type
- Language
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enPrimary language
- Publication year
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2023Year of publication
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2023-07-01Full publication date if available
- Authors
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Roberto M. Billi, Jordi Galı́, Antón NákovList of authors in order
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https://doi.org/10.3386/w31508Publisher landing page
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YesWhether a free full text is available
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goldOpen access status per OpenAlex
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https://doi.org/10.3386/w31508Direct OA link when available
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Monetary policy, Economics, Monetary economicsTop concepts (fields/topics) attached by OpenAlex
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0Total citation count in OpenAlex
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46Number of works referenced by this work
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10Other works algorithmically related by OpenAlex
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| abstract_inverted_index.output | 64 |
| abstract_inverted_index.policy | 5, 37, 55, 77 |
| abstract_inverted_index.regime | 133 |
| abstract_inverted_index.shocks | 68 |
| abstract_inverted_index.state, | 52 |
| abstract_inverted_index.steady | 25, 44, 51 |
| abstract_inverted_index.unique | 104 |
| abstract_inverted_index.average | 48 |
| abstract_inverted_index.becomes | 30 |
| abstract_inverted_index.central | 95 |
| abstract_inverted_index.defined | 58 |
| abstract_inverted_index.economy | 11 |
| abstract_inverted_index.general | 129 |
| abstract_inverted_index.implies | 56, 78 |
| abstract_inverted_index.natural | 27, 71 |
| abstract_inverted_index.nominal | 20, 81 |
| abstract_inverted_index.optimal | 3, 36, 54, 76, 100 |
| abstract_inverted_index.outcome | 101 |
| abstract_inverted_index.problem | 6 |
| abstract_inverted_index.remains | 83 |
| abstract_inverted_index.result, | 119 |
| abstract_inverted_index.rule.In | 114 |
| abstract_inverted_index.approach | 40 |
| abstract_inverted_index.feature, | 93 |
| abstract_inverted_index.interest | 21, 112 |
| abstract_inverted_index.monetary | 4 |
| abstract_inverted_index.positive | 47 |
| abstract_inverted_index.response | 66 |
| abstract_inverted_index.Keynesian | 10 |
| abstract_inverted_index.establish | 117 |
| abstract_inverted_index.gradually | 41 |
| abstract_inverted_index.implement | 98 |
| abstract_inverted_index.inflation | 62 |
| abstract_inverted_index.nonlinear | 111 |
| abstract_inverted_index.plausible | 73 |
| abstract_inverted_index.switches. | 134 |
| abstract_inverted_index.conditions | 123 |
| abstract_inverted_index.endogenous | 132 |
| abstract_inverted_index.rate.Under | 72 |
| abstract_inverted_index.sufficient | 122 |
| abstract_inverted_index.appropriate | 110 |
| abstract_inverted_index.determinacy | 126 |
| abstract_inverted_index.equilibrium | 105 |
| abstract_inverted_index.negative.We | 32 |
| abstract_inverted_index.permanently | 31 |
| abstract_inverted_index.time.Despite | 90 |
| abstract_inverted_index.(second-best) | 59 |
| abstract_inverted_index.calibrations, | 74 |
| abstract_inverted_index.inflation.Around | 49 |
| cited_by_percentile_year | |
| countries_distinct_count | 4 |
| institutions_distinct_count | 3 |
| citation_normalized_percentile |