Interest-Rate Rules in a New Keynesian Framework with Investment

Elena Pavlova

ISBN 10: 3631611285 / ISBN 13: 9783631611289

Published by Peter Lang, Peter Lang Mär 2011, 2011

About this Item

Neuware -The last decades have witnessed major progress in both monetary policy theory and practice, with broad academic consensus on the desirability of monetary policy rules and ongoing research on their exact specification. Typically, the analysis is carried out in a New Keynesian framework with nominal rigidities and constant capital stock. The latter represents a constraint that this study seeks to overcome by introducing a model with investment and capital adjustment costs. The work assesses different interest-rate rule specifications with respect to the target variables included, based on two criteria: determinacy of rational-expectations equilibrium and convergence to steady state after a shock. The study concludes that rules with both an inflation and an output gap target ensure a unique rational-expectations equilibrium and a less distressful adjustment of the economy after the occurrence of shocks. 162 pp. Englisch.

Seller Inventory # 9783631611289

Bibliographic Details

• Title: Interest-Rate Rules in a New Keynesian Framework with Investment
• Publisher: Peter Lang, Peter Lang Mär 2011
• Publication Date: 2011
• Language: English
• ISBN 10: 3631611285
• ISBN 13: 9783631611289
• Binding: Buch
• Condition: Neu
• Dimensions: 216W x 153H x 13D millimeters 216 millimeters width by 153 millimeters height by 13 millimeters depth
• Weight: 330 grams

About this title

Synopsis

The last decades have witnessed major progress in both monetary policy theory and practice, with broad academic consensus on the desirability of monetary policy rules and ongoing research on their exact specification. Typically, the analysis is carried out in a New Keynesian framework with nominal rigidities and constant capital stock. The latter represents a constraint that this study seeks to overcome by introducing a model with investment and capital adjustment costs. The work assesses different interest-rate rule specifications with respect to the target variables included, based on two criteria: determinacy of rational-expectations equilibrium and convergence to steady state after a shock. The study concludes that rules with both an inflation and an output gap target ensure a unique rational-expectations equilibrium and a less distressful adjustment of the economy after the occurrence of shocks.

About the Author

Elena Pavlova studied Economics at the University of National and World Economy in Sofia. During her studies, she joined as a Researcher the Centre for Economic Development, a leading economic policy think tank in Bulgaria. In 2004-2008 she was a Teaching and Research Assistant at the Institute for Theoretical Economics at the Helmut Schmidt University Hamburg. Since 2008 the author works as an Economist at the European Commission in Brussels.