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the editor and an anonymous referee for insightful comments and suggestions. We also thank participants at the AEA meetings, the Society of Economic Dynamics conference and the NBER Monetary Economics meeting for useful suggestions, and Alex Al-Haschimi for research assistance. Jean Boivin thanks the NSF (grant SES-0001751) for Þnancial support. Any errors(More)
This paper characterizes optimal monetary policy for a range of alternative economic models, applying the general theory developed in Giannoni and Woodford (2002a). The rules computed here have the advantage of being optimal regardless of the assumed character of exogenous additive disturbances, though other aspects of model specification do affect the form(More)
This paper investigates how monetary policy should be conducted in a two-region, general equilibrium model with monopolistic competition and price stickiness. This framework delivers a simple welfare criterion based on the utility of the consumers that has the usual trade-off between stabilizing inflation and output. If the two regions share the same degree(More)
This paper uses factor-augmented vector autoregressions (FAVAR) estimated using a large data set to disentangle fluctuations in disaggregated consumer and producer prices which are due to macroeconomic factors from those due to sectorial conditions. This allows us to provide consistent estimates of the effects of US monetary policy on disaggregated prices.(More)
Despite the large amount of empirical research on monetary policy rules, there is surprisingly little consensus on the nature or even the existence of changes in the conduct of monetary policy. Three issues appear central to this disagreement: 1) the specific type of changes in the policy coefficients 2) the treatment of heteroskedasticity and 3) the(More)
Most analyses of the U.S. Great Moderation have been based on VAR methods , and have consistently pointed toward good luck as the main explanation for the greater macroeconomic stability of recent years. Using data generated by a New-Keynesian model in which the only source of change is the move from passive to active monetary policy, we show that VARs may(More)