Limitations on the Effectiveness of Monetary Policy Forward Guidance in the Context of the Covid-19 Pandemic
In: NBER Working Paper No. w27748
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In: NBER Working Paper No. w27748
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In: De Nederlandsche Bank Working Paper No. 408
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In: IMF Working Paper No. 13/245
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How monetary policy should be set optimally when the structure of the economy exhibits inflation persistence is an important question for policy makers. This paper provides an overview of the implications of inflation persistence for the design of monetary policy.
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In: Economic Development and Cultural Change, Band 46, Heft 1, S. 155-174
ISSN: 1539-2988
In: Working paper 334
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In: NBER Working Paper No. w25455
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In: NBER Working Paper No. w23711
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In: CAMA Working Paper 37/2012
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In: NBER Working Paper No. w15630
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In: Journal of monetary economics, Band 50, Heft 5, S. 945-975
In: Journal of Monetary Economics, Band 50, Heft 4, S. 915-944
In this study, we perform a quantitative assessment of the role of money as an indicator variable for monetary policy in the euro area. We document the magnitude of revisions to euro area-wide data on output, prices, and money, and find that monetary aggregates have a potentially significant role in providing information about current real output. We then proceed to analyze the information content of money in a forward-looking model in which monetary policy is optimally determined subject to incomplete information about the true state of the economy. We show that monetary aggregates may have substantial information content in an environment with high variability of output measurement errors, low variability of money demand shocks, and a strong contemporaneous linkage between money demand and real output. As a practical matter, however, we conclude that money has fairly limited information content as an indicator of contemporaneous aggregate demand in the euro area.
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