2006, English, Article, Working paper edition: Inflation risk and optimal monetary policy [electronic resource] / by William T. Gavin, Benjamin D. Keen, and Michael R. Pakko. Gavin, William T.

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Bookmark: https://trove.nla.gov.au/version/23135999
Published
  • [St. Louis, Mo.] : Federal Reserve Bank of St. Louis, [2006]
Language
  • English

Edition details

Title
  • Inflation risk and optimal monetary policy /​ by William T. Gavin, Benjamin D. Keen, and Michael R. Pakko.
Author
  • Gavin, William T.
Other Authors
  • Keen, Benjamin D.
  • Pakko, Michael R.
  • Federal Reserve Bank of St. Louis
Published
  • [St. Louis, Mo.] : Federal Reserve Bank of St. Louis, [2006]
Medium
  • [electronic resource]
Series
Subjects
Summary
  • "This paper shows that the optimal monetary policies recommended by New Keynesian models still imply a large amount of inflation risk. We calculate the term structure of inflation uncertainty in New Keynesian models when the monetary authority adopts the optimal policy--the policy that minimizes the gap between output in the New Keynesian model and output in a flexible wage and price model. When the monetary policy rules are modified to include a small weight on a price path, the economy achieves equilibria with substantially lower long-run inflation risk. With sticky prices, the price path target reduces long-run inflation uncertainty with no measurable increase in the variability of the output gap. With sticky wages, a tradeoff exists between short-run output stabilization and long-run inflation risk"--Federal Reserve Bank of St. Louis web site.
Notes
  • Title from PDF file as viewed on 6/​1/​2006.
  • Includes bibliographical references.
  • Also available in print.
Technical Details
  • System requirements: Adobe Acrobat Reader.
  • Mode of access: World Wide Web.
Language
  • English
Libraries Australia ID
Contributed by
Libraries Australia

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