• Corpus ID: 174794621

Groupe de Recherche en Économie et Développement International Cahier de recherche / Working Paper 09-18 Nominal Rigidities, Monetary Policy and Pigou Cycles

@inproceedings{Auray2009GroupeDR,
  title={Groupe de Recherche en Économie et Développement International Cahier de recherche / Working Paper 09-18 Nominal Rigidities, Monetary Policy and Pigou Cycles},
  author={St{\'e}phane Auray and Paul Gomme and Shen Guo and Pigou Cycles},
  year={2009}
}
A chief goal of the Pigou cycle literature is to generate a boom in response to news of a future increase in productivity, and a bust if this improvement does not in fact take place. We find that monetary policy can generate Pigou cycles in a two sector model with durables and non-durables, and nominal price rigidities – even when the Ramsey-optimal policy displays no such cycles. Estimated interest rate rules are a good fit to data simulated under the Ramsey policy, implying that policymakers… 

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