scholarly journals Supply, Demand and Monetary Policy Shocks in a Multi-Country New Keynesian Model

2010 ◽  
Author(s):  
Stephane Dees ◽  
M. Hashem Pesaran ◽  
L. Vanessa Smith ◽  
Ron P. Smith
Keyword(s):  
Monetary Policy ◽  
New Keynesian ◽  
New Keynesian Model ◽  
Monetary Policy Shocks ◽  
Keynesian Model ◽  
Policy Shocks

Services Deepening and the Transmission of Monetary Policy

2018 ◽  
Vol 17 (4) ◽  
pp. 1261-1293 ◽  
Author(s):  
Alessandro Galesi ◽  
Omar Rachedi
Keyword(s):  
Monetary Policy ◽  
New Keynesian ◽  
Monetary Policy Shocks ◽  
Marginal Costs ◽  
Cost Channel ◽  
Keynesian Model ◽  
Output Matrix ◽  
Inflation Rates ◽  
Policy Shocks ◽  
Transmission Of Monetary Policy

Abstract The structural transformation from manufacturing to services comes with a process of services deepening: the services share of intermediate inputs rises over time. Moreover, inflation reacts less to monetary policy shocks in countries that are more intensive in services intermediates. We rationalize these facts using a two-sector New Keynesian model where trends in sectoral productivities generate endogenous variations in the Input–Output matrix. Services deepening reduces the contemporaneous response of inflation to monetary policy shocks through a marginal cost channel. Since services prices are stickier than manufacturing prices, the rise of services intermediates raises the sluggishness of sectoral marginal costs and inflation rates.

scholarly journals INTEREST RATE EFFECTS OF DEMOGRAPHIC CHANGES IN A NEW KEYNESIAN LIFE-CYCLE FRAMEWORK

2014 ◽  
Vol 20 (1) ◽  
pp. 120-164 ◽  
Author(s):  
Engin Kara ◽  
Leopold von Thadden
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
New Keynesian ◽  
Policy Framework ◽  
Small Scale ◽  
Monetary Policy Shocks ◽  
Keynesian Model ◽  
Rate Effects ◽  
Policy Shocks ◽  
Short Run

This paper develops a small-scale DSGE model that embeds a demographic structure within a monetary policy framework. We extend the nonmonetary overlapping-generations model of Gertler and present a small synthesis model that combines the setup of Gertler with a New Keynesian structure, implying that the short-run dynamics related to monetary policy can be compared with that of the standard New Keynesian model. In sum, the model offers a New Keynesian platform that can be used to characterize the response of macroeconomic variables to demographic shocks, similarly to the responses to technology or monetary policy shocks. We offer such characterizations for flexible and sticky price equilibria. Empirically, we calibrate the model to demographic developments projected for the euro area. The main finding is that the projected slowdown in population growth and the increase in longevity contribute slowly over time to a decline in the equilibrium interest rate.

INSIDE MONEY IN GENERAL EQUILIBRIUM: DOES IT MATTER FOR MONETARY POLICY?

2011 ◽  
Vol 17 (3) ◽  
pp. 563-590 ◽  
Author(s):  
Livio Stracca
Keyword(s):  
Monetary Policy ◽  
Active Role ◽  
Significant Loss ◽  
New Keynesian ◽  
Monetary Policy Shocks ◽  
Real Effects ◽  
Keynesian Model ◽  
Inside Money ◽  
Policy Shocks ◽  
Money Shocks

This paper analyzes the role and importance of “inside” money, made out of commercial banks' liabilities, for a New Keynesian model of the type commonly used for monetary policy analysis. The active role of inside money stems from its unique role in allowing payment for at least some consumption goods; shocks to the production of inside money may therefore have real effects. A calibrated version of the model is shown to generate small, but nonnegligible effects of inside money shocks on output and inflation. Moreover, the presence of inside money in the model leads to a slight attenuation of the effect of technology and monetary policy shocks. Finally, it is found that it is optimal for monetary policy to react to inside money shocks, but reacting to inflation alone does not result in a significant loss of household welfare.

ARE MAJOR CENTRAL BANKS BLINDED BY THE ANALYTICAL ELEGANCE OF THEIR MODELS? POSSIBLE COSTS OF UNCONVENTIONAL MONETARY POLICY MEASURES

2017 ◽  
Vol 62 (01) ◽  
pp. 87-108 ◽  
Author(s):  
PIOTR CIŻKOWICZ ◽  
ANDRZEJ RZOŃCAZ
Keyword(s):  
Monetary Policy ◽  
Global Financial Crisis ◽  
Significant Risk ◽  
Central Banks ◽  
New Keynesian ◽  
New Keynesian Model ◽  
Unconventional Monetary Policy ◽  
Keynesian Model ◽  
Policy Measures ◽  
The Global Financial Crisis

We survey the possible costs of the unconventional monetary policy measures undertaken by major central banks after the outbreak of the global financial crisis in 2008. We argue that these costs are not easily discernable in the new Keynesian (NK) model, which defines a theoretical framework for monetary policy. First, the costs may result from the effects of unconventional monetary policy measures on the intensity of restructuring and the persistence of uncertainty (which increased after the outbreak of the crisis). However, neither of these processes is considered in the new Keynesian model. Second, costs may be generated not only by distortions in the choices made by economic agents but may also be a result of the decisions made by governments, particularly in terms of the fiscal deficit level. However, the new Keynesian model does not consider the effects of unconventional monetary policy measures on the quality of fiscal policy. Without carefully considering the costs, there is a significant risk that unconventional monetary policy measures could become a conventional response to recurrent crises.

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