Information variables for monetary policy in an estimated structural model of the euro area

@inproceedings{Lippi2007InformationVF,
  title={Information variables for monetary policy in an estimated structural model of the euro area},
  author={Francesco Lippi and Stefano Neri},
  year={2007}
}
This Paper estimates a small New-Keynesian model with imperfect information and optimal discretionary policy using data for the euro area. The model is used to assess the usefulness of monetary aggregates and unit labour costs as information variables for monetary policy. The estimates reveal that the information content of the M3 monetary aggregate is limited. A more useful role emerges for the unit labour costs indicator, which contains information that helps to reduce the volatility of the… CONTINUE READING

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