The Science of Monetary Policy: A New Keynesian Perspective / Richard Clarida, Jordi Gali, Mark Gertler.

Format:

Book

Author/Creator:

Clarida, Richard.

Contributor:

National Bureau of Economic Research.

Gali, Jordi.

Gertler, Mark.

Series:

Working Paper Series (National Bureau of Economic Research) no. w7147.

NBER working paper series no. w7147

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Science of Monetary Policy

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1999.

Summary:

This paper reviews the recent literature on monetary policy rules. We exploit the monetary policy design problem within a simple baseline theoretical framework. We then consider the implications of adding various real world complications. Among other things, we show that the optimal policy implicitly incorporates inflation targeting. We also characterize the gains from making a credible commitment to fight inflation. In contrast to conventional wisdom, we show that gains from commitment may emerge even if the central bank is not trying to inadvisedly push output above its natural level. We also consider the implications of frictions such as imperfect information.

Notes:

Print version record

May 1999.