By accessing or using this site you accept and agree to our Terms and Conditions
We run an ad-free website, help us keep going, Support Us!
Inside this Book



If you make use of this material, you may credit the authors as follows:
Pavlova Elena, "Interest-Rate Rules in a New Keynesian Framework with Investment", Peter Lang International Academic Publishing Group, 2012-06-26, DOI: 10.3726/978-3-653-01444-0, License: https://creativecommons.org/licenses/by/4.0/legalcode
The last decades have witnessed major progress in both monetary policy theory and practice, with broad academic consensus on the desirability of monetary policy rules and ongoing research on their exact specification. Typically, the analysis is carried out in a New Keynesian framework with nominal rigidities and constant capital stock. The latter represents a constraint that this study seeks to overcome by introducing a model with investment and capital adjustment costs. The work assesses different interest-rate rule specifications with respect to the target variables included, based on two criteria: determinacy of rational-expectations equilibrium and convergence to steady state after a shock. The study concludes that rules with both an inflation and an output gap target ensure a unique rational-expectations equilibrium and a less distressful adjustment of the economy after the occurrence of shocks.
Keywords
Framework, Inflation-targeting, Interest, Investment, Keynesian, Monetary Policy, Pavlova, Rate, Rational-expectations Equilibrium, Rules, Taylor Principle, With
Rights | License
Except where otherwise noted, this item has been published under the following license:
You might also be interested in the following books from Amazon:
Takedown policy:
If you believe that this publication infringes copyright, please contact us at info@jecasa-ltd.com and provide relevant details so that we can investigate your claim.