Learn 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)
Working papers from 1999 onwards are available on www.norges-bank.no Norges Bank's working papers present research projects and reports (not usually in their final form) and are intended inter alia to enable the author to benefit from the comments of colleagues and other interested parties. Views and conclusions expressed in working papers are the(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(x 1 ; :::x k). We analyze when it is possible for the group to arrive at collective judgements on the variables that respect D. We consider(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)
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 overcon…dent pol-icymakers and a chairman with agenda-setting rights can explain all these features.(More)
This paper develops a basic model for output fluctuations in traded and non-traded 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)
Working papers from 1999 onwards are available on www.norges-bank.no Norges Bank's working papers present research projects and reports (not usually in their final form) and are intended inter alia to enable the author to benefit from the comments of colleagues and other interested parties. Views and conclusions expressed in working papers are the(More)
seminar participants at the Central Bank of Norway and the Federal Reserve Bank of Kansas City for helpful comments and discussions. The views expressed herein are solely those of the author and do not necessarily re ‡ect the views of the Federal Reserve Bank of Kansas City or the Federal Reserve System. Abstract With in ‡ation and policy interest rates at(More)