scholarly journals Staggered Price Setting, Bertrand Competition and Optimal Monetary Policy

2014 ◽  
Author(s):  
Federico Etro ◽  
Lorenza Rossi
Keyword(s):  
Monetary Policy ◽  
Bertrand Competition ◽  
Price Setting ◽  
Optimal Monetary Policy

Optimal Monetary Policy with Relative Price Distortions

2005 ◽  
Vol 95 (1) ◽  
pp. 89-109 ◽  
Author(s):  
Tack Yun
Keyword(s):  
Monetary Policy ◽  
Price Dispersion ◽  
Relative Price ◽  
Price Setting ◽  
Optimal Monetary Policy ◽  
Equilibrium Conditions ◽  
Price Distortion ◽  
Inflation Targets ◽  
Price Distortions ◽  
Initial Price

This paper analyzes optimal monetary policy in a sticky price model with Calvo-type staggered price-setting. In the paper, the optimal monetary policy maximizes the expected utility of a representative household without having to rely on a set of linearly approximated equilibrium conditions, given the distortions associated with the staggered price-setting. It shows that the complete stabilization of the price level is optimal in the absence of initial price dispersion, while optimal inflation targets respond to changes in the level of relative price distortion in the presence of initial price dispersion.

scholarly journals Labor Markets and Monetary Policy: A New Keynesian Model with Unemployment

2010 ◽  
Vol 2 (2) ◽  
pp. 1-30 ◽  
Author(s):  
Olivier Blanchard ◽  
Jordi Galí
Keyword(s):  
Monetary Policy ◽  
Labor Market ◽  
Labor Markets ◽  
New Keynesian ◽  
Price Setting ◽  
Efficient Allocation ◽  
New Keynesian Model ◽  
Optimal Monetary Policy ◽  
Productivity Shocks ◽  
Keynesian Model

We construct a utility-based model of fluctuations with nominal rigidities and unemployment. We first show that under a standard utility specification, productivity shocks have no effect on unemployment in the constrained efficient allocation. That property is also shown to hold, despite labor market frictions, in the decentralized equilibrium under flexible prices and wages. Inefficient unemployment fluctuations arise when we introduce real-wage rigidities. As a result, in the presence of staggered price setting by firms, the central bank faces a trade-off between inflation and unemployment stabilization, which depends on labor market characteristics. We draw the implications for optimal monetary policy. (JEL E12, E24, E52)

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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