Øistein Røisland

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Setting the interest rate in an inflation targeting regime requires a total assessment, often translated into forecasts, of the outlook for inflation and real activity. In the assessment process, it is useful to have some references or cross-checks, in terms of simple rules. Although simple rules should not be followed mechanically, they provide a device(More)
This paper extends previous research on simple inflation-forecast targeting by considering its effect in the open economy. It discusses the effect of the forecast-targeting horizon on interest rates and the exchange rate, and moreover what role it plays in determining the rational expectations equilibrium. Inflation-forecast targeting may not comply with(More)
The typical judgment aggregation problem in economics and other …elds is the following: A group of people has to judge/estimate the value of an uncertain variable y which is a function of k other variables, i.e. y = D(x1; :::xk) . We analyze when it is possible for the group to arrive at collective judgements on the variables that respect D. We consider(More)
A discretionary monetary policy leads to sub-optimal stabilization in models with the New Keynesian assumption of forward-looking price setting, and various policy rules that improve the discretionary equilibrium have been considered in the literature. The empirical evidence for forward-looking price determination is mixed. This note shows, however, that(More)
This paper analyses time-inconsistency problems related to the exchange rate channel of monetary policy. Within a simple open-economy macroeconomic model, where the exchange rate is the only forward-looking variable, we show that a difference emerges between optimal policy under discretion and under commitment. Moreover, the nature of the time-inconsistency(More)
Monetary policy decisions are typically characterized by three features: (i) decisions are made by a committee, (ii) the committee members often disagree, and (iii) the chairman is almost never on the losing side in the vote. We show that the combination of overconfident policymakers and a chairman with agenda-setting rights can explain all these features.(More)
The discursive dilemma implies that the policy decision of a board of policymakers depends on whether the board reaches the decision by voting directly on policy (conclusion-based procedure), or by voting on the premises for the decision (premise-based procedure). We derive results showing when the discursive dilemma may occur, both in a general model and(More)
Several countries face the choice between targeting inflation independently and entering a monetary union that targets inflation. The present paper extends the theory of optimum currency areas to deal with this choice. In contrast to the conventional theory, countries might form more of an optimum currency area the more asymmetric supply shocks are. By(More)
This paper develops a basic model for output fluctuations in traded and nontraded sectors under two alternative monetary policy regimes; exchange rate targeting (or monetary union) and inflation targeting. The conventional wisdom from one-sector models says that inflation targeting gives better output stabilization than exchange rate targeting when demand(More)
Business cycles are rarely fully syncronised across sectors. This may be a result of asymmetric shocks, or divergent responses to symmetric shocks, such as monetary policy shocks. If there is imperfect risk-sharing across sectors, there is an argument for letting the central bank stabilize employment and production in each sector separately, instead of(More)