Suchergebnisse

Many recent discussions on the conduct of monetary policy through interest rate rules have given a very central role to inflation, both as an objective and as an intermediate instrument. We want to show that other variables like employment can be as important or even more. For that we construct a dynamic stochastic general equilibrium (DSGE) model where the economy is subject to demand and supply shocks. We compute closed form solutions for the optimal interest rate rules and find that they can be function of employment only, which then dominates inflation for use in the policy rule. ; De nombreuses discussions récentes sur la conduite de la politique monétaire via des règles de taux d'intérèt ont donné un rôle central au taux d'inflation, à la fois comme objectif ou comme instrument intermédiaire. On veut montrer ici que d'autres variables comme l'emploi peuvent jouer un rôle aussi important sinon davantage. Pour cela on construit un modèle d'équilibre général dynamique stochastique où l'économie est soumise à des chocs d'offre et de demande. On calcule des solutions exactes pour les règles de taux d'intérèt optimales et on trouve qu'elles peuvent s'exprimer en fonction du seul niveau d'emploi, qui apparaît donc comme un meilleur instrument intermédiaire que le taux d'inflation.

Many recent discussions on the conduct of monetary policy through interest rate rules have given a very central role to inflation, both as an objective and as an intermediate instrument. We want to show that other variables like employment can be as important or even more. For that we construct a dynamic stochastic general equilibrium (DSGE) model where the economy is subject to demand and supply shocks. We compute closed form solutions for the optimal interest rate rules and find that they can be function of employment only, which then dominates inflation for use in the policy rule. ; De nombreuses discussions récentes sur la conduite de la politique monétaire via des règles de taux d'intérèt ont donné un rôle central au taux d'inflation, à la fois comme objectif ou comme instrument intermédiaire. On veut montrer ici que d'autres variables comme l'emploi peuvent jouer un rôle aussi important sinon davantage. Pour cela on construit un modèle d'équilibre général dynamique stochastique où l'économie est soumise à des chocs d'offre et de demande. On calcule des solutions exactes pour les règles de taux d'intérèt optimales et on trouve qu'elles peuvent s'exprimer en fonction du seul niveau d'emploi, qui apparaît donc comme un meilleur instrument intermédiaire que le taux d'inflation.

We study the tax/subsidy competition between two countries to attract the FDI projects of two firms. We assume that governments lack the capacity to target every potential inward investor such that each can only bid for a single firm. When the characteristics of the two countries are common knowledge, subsidy competition never arises in equilibrium. Both governments may target the same firm if there is uncertainty as to the more profitable location for that firm's plant, such that both governments believe they may win the competition. We also explore how such uncertainty affects the firms' after-tax profits.

Various papers have suggested that Price-Level targeting is a welfare improving policy relative to Inflation targeting. From a practical standpoint, this raises an important yet unanswered question: What is the optimal price index to target? This paper derives the optimal price level targeting index defined over the eight main components of the Consumer Price Index. It finds that such an index places a heavier weight, relative to the expenditure weight, on sectors with slow price adjustments. However, using the expenditure weights instead of the optimal ones results in very small welfare cost.

This paper investigates the long-term impact of price-level targeting on social welfare in an overlapping generations model in which the young save for old age by investing in productive capital and indexed and nominal government bonds. A key feature of the model is that the extent of bond indexation is determined endogenously in response to monetary policy as part of an optimal commitment Ramsey policy. Due to the absence of base-level drift under price-level targeting, long-term inflation risk is reduced by an order of magnitude compared to inflation targeting. Consequently, real bond returns are stabilised somewhat, and consumption volatility for old generations is reduced by around 15 per cent. The baseline welfare gain from price- level targeting is equivalent to a permanent increase in aggregate consumption of only 0.01 per cent, but this estimate is strongly sensitive on the upside.