Optimal Monetary Policy with Fundamental Shifts in Asset Prices

2010 ◽  
Author(s):  
James Hansen
Keyword(s):  
Monetary Policy ◽  
Asset Prices ◽  
Optimal Monetary Policy

A NOTE ON MONETARY POLICY, ASSET PRICES, AND MODEL UNCERTAINTY

2012 ◽  
Vol 16 (5) ◽  
pp. 777-790 ◽  
Author(s):  
Meixing Dai ◽  
Eleftherios Spyromitros
Keyword(s):  
Monetary Policy ◽  
Financial Markets ◽  
Asset Prices ◽  
Inflation Rate ◽  
Asset Price ◽  
Optimal Monetary Policy ◽  
Macroeconomic Dynamics ◽  
High Preference ◽  
And Performance ◽  
The Cost

Using a macroeconomic model with asset prices, we analyze how optimal monetary policy and macroeconomic dynamics and performance are affected by a central bank's desire to be robust against model misspecifications. We show that a higher central bank preference for robustness implies a more aggressive reaction of the nominal interest rate to the expected future inflation rate and inflation shocks. The dynamic stability of the equilibrium is not modified for a sufficiently high preference for robustness. However, the speed of dynamic convergence is lower under robust control compared to a benchmark case without it and implies supplementary economic costs. Finally, an increase in the preference for robustness comes at the cost of higher macroeconomic and financial volatility in the presence of inflation shocks. It has no effect on the reaction of inflation, output gap, and asset price gap to shocks affecting goods and financial markets.

scholarly journals Optimal monetary policy and asset prices : the case of Colombia

2010 ◽  
pp. 167-197
Author(s):  
Martha Rosalba López-Piñeros ◽  
Juan David Prada-Sarmiento
Keyword(s):  
Monetary Policy ◽  
Asset Prices ◽  
Optimal Monetary Policy

scholarly journals Optimal monetary policy and asset prices: the case of Colombia

2009 ◽  
Author(s):  
Martha Rosalba López-Piñeros ◽  
Juan David Prada-Sarmiento
Keyword(s):  
Monetary Policy ◽  
Asset Prices ◽  
Optimal Monetary Policy

Optimal Monetary Policy at the Zero Lower Bound

2015 ◽  
Author(s):  
Costas Azariadis ◽  
James Bullard ◽  
Aarti Singh ◽  
Jacek Suda
Keyword(s):  
Monetary Policy ◽  
Lower Bound ◽  
Zero Lower Bound ◽  
Optimal Monetary Policy
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