Interest and prices : foundations of a theory of monetary policy

Başlık:

Yazar:

Woodford, Michael, Professor.

ISBN:

9780691010496

Ek Yazar:

Woodford, Michael, Professor.

Yayım Bilgisi:

Princeton, N.J. ; Woodstock, Oxfordshire [England] : Princeton University Press, c2003.

Fiziksel Tanım:

xv, 785 p. : ill. ; 25 cm.

Contents:

The return of monetary rules -- Price-level determination under interest-rate rules -- Optimizing models with nominal rigidities -- A neo-Wicksellian framework for the analysis of monetary policy -- Dynamics of the response to monetary policy -- Inflation stabilization and welfare -- Gains from commitment to a policy rule -- Optimal monetary policy rules.

Konu Terimleri:

Monetary policy.

Para politikası.

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Library	Materyal Türü	Barkod	Yer Numarası	Durum
Searching... Pamukkale Merkez Kütüphanesi	Kitap	0131517	HG230.3 W66 2003	Searching... Unknown

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Özet

With the collapse of the Bretton Woods system, any pretense of a connection of the world's currencies to any real commodity has been abandoned. Yet since the 1980s, most central banks have abandoned money-growth targets as practical guidelines for monetary policy as well. How then can pure "fiat" currencies be managed so as to create confidence in the stability of national units of account?

Interest and Price s seeks to provide theoretical foundations for a rule-based approach to monetary policy suitable for a world of instant communications and ever more efficient financial markets. In such a world, effective monetary policy requires that central banks construct a conscious and articulate account of what they are doing. Michael Woodford reexamines the foundations of monetary economics, and shows how interest-rate policy can be used to achieve an inflation target in the absence of either commodity backing or control of a monetary aggregate.

The book further shows how the tools of modern macroeconomic theory can be used to design an optimal inflation-targeting regime--one that balances stabilization goals with the pursuit of price stability in a way that is grounded in an explicit welfare analysis, and that takes account of the "New Classical" critique of traditional policy evaluation exercises. It thus argues that rule-based policymaking need not mean adherence to a rigid framework unrelated to stabilization objectives for the sake of credibility, while at the same time showing the advantages of rule-based over purely discretionary policymaking.

Author Notes

Michael Woodford is the Harold H. Helm '20 Professor of Economics and Banking at Princeton University. He is the coeditor, with John B. Taylor, of The Handbook of Macroeconomics .

Preface	p. xiii
Chapter 1 The Return of Monetary Rules	p. 1
1 The Importance of Price Stability	p. 4
1.1 Toward a New "Neoclassical Synthesis"	p. 6
1.2 Microeconomic Foundations and Policy Analysis	p. 10
2 The Importance of Policy Commitment	p. 14
2.1 Central Banking as Management of Expectations	p. 15
2.2 Pitfalls of Conventional Optimal Control	p. 18
3 Monetary Policy without Control of a Monetary Aggregate	p. 24
3.1 Implementing Interest-Rate Policy	p. 25
3.2 Monetary Policy in a Cashless Economy	p. 31
4 Interest-Rate Rules	p. 37
4.1 Contemporary Proposals	p. 39
4.2 General Criticisms of Interest-Rate Rules	p. 44
4.3 Neo-Wicksellian Monetary Theory	p. 49
5 Plan of the Book	p. 55
Part I Analytical Framework
Chapter 2 Price-Level Determination under Interest-Rate Rules	p. 61
1 Price-Level Determination in a Cashless Economy	p. 62
1.1 An Asset-Pricing Model with Nominal Assets	p. 64
1.2 A Wicksellian Policy Regime	p. 74
2 Alternative Interest-Rate Rules	p. 85
2.1 Exogenous Interest-Rate Targets	p. 86
2.2 The Taylor Principle and Determinacy	p. 90
2.3 Inertial Responses to Inflation Variation	p. 94
3 Price-Level Determination with Monetary Frictions	p. 101
3.1 A Model with Transactions Frictions	p. 102
3.2 Interest-Rate Rules Reconsidered	p. 105
3.3 A Comparison with Money-Growth Targeting	p. 106
3.4 Consequences of Nonseparable Utility	p. 111
4 Self-Fulfilling Inflations and Deflations	p. 123
4.1 Global Multiplicity Despite Local Determinacy	p. 123
4.2 Policies to Prevent a Deflationary Trap	p. 131
4.3 Policies to Prevent an Inflationary Panic	p. 135
Chapter 3 Optimizing Models with Nominal Rigidities	p. 139
1 A Basic Sticky-Price Model	p. 143
1.1 Pricesetting and Endogenous Output	p. 143
1.2 Consequences of Prices Fixed in Advance	p. 155
1.3 A New Classical Phillips Curve	p. 158
1.4 Sources of Strategic Complementarity	p. 163
2 Inflation Dynamics with Staggered Pricesetting	p. 173
2.1 The Calvo Model of Pricesetting	p. 177
2.2 A New Keynesian Phillips Curve	p. 187
2.3 Persistent Real Effects of Nominal Disturbances	p. 188
2.4 Consequences of Persistence in the Growth of Nominal Spending	p. 197
2.5 Consequences of Sectoral Asymmetries	p. 200
3 Delayed Effects of Nominal Disturbances on Inflation	p. 204
3.1 Staggered Pricing with Delayed Price Changes	p. 207
3.2 Consequences of Indexation to Past Inflation	p. 213
4 Consequences of Nominal Wage Stickiness	p. 218
4.1 A Model of Staggered Wagesetting	p. 221
4.2 Sticky Wages and the Real Effects of Nominal Disturbances	p. 226
Chapter 4 A Neo-Wicksellian Framework for the Analysis of Monetary Policy	p. 237
1 A Basic Modelof the Effects of Monetary Policy	p. 238
1.1 Nonlinear Equilibrium Conditions	p. 239
1.2 A Log-Linear Approximate Model	p. 243
2 Interest-Rate Rules and Price Stability	p. 247
2.1 The Natural Rate of Interest	p. 247
2.2 Conditions for Determinacy of Equilibrium	p. 252
2.3 Stability under Learning Dynamics	p. 261
2.4 Determinants of Inflation	p. 276
2.5 Inflation Stabilization through Commitment to a Taylor Rule	p. 286
2.6 Inflation Targeting Rules	p. 290
3 Money and Aggregate Demand	p. 295
3.1 An Optimizing IS-LM Model	p. 295
3.2 Real-Balance Effects	p. 299
4 Fiscal Requirements for Price Stability	p. 311
Chapter 5 Dynamics of the Response to Monetary Policy	p. 320
1 Delayed Effects of Monetary Policy	p. 321
1.1 Consequences of Predetermined Expenditure	p. 322
1.2 Habit Persistence in Private Expenditure	p. 332
2 Some Small Quantitative Models	p. 336
2.1 The Rotemberg-Woodford Model	p. 336
2.2 More Complex Variants	p. 345
3 Monetary Policy and Investment Dynamics	p. 352
3.1 Investment Demand with Sticky Prices	p. 353
3.2 Optimal Pricesetting with Endogenous Capital	p. 357
3.3 Comparison with the Basic Neo-Wicksellian Model	p. 361
3.4 Capital and the Natural Rate of Interest	p. 372
Part II Optimal Policy
Chapter 6 Inflation Stabilization and Welfare	p. 381
1 Approximation of Loss Functions and Optimal Policies	p. 383
2 A Utility-Based Welfare Criterion	p. 392
2.1 Output-Gap Stability and Welfare	p. 393
2.2 Inflation and Relative-Price Distortions	p. 396
3 The Case for Price Stability	p. 405
3.1 The Case of an Efficient Natural Rate of Output	p. 407
3.2 Consequences of a Mildly InEfficient Natural Rate of Output	p. 411
3.3 Caveats	p. 416
4 Extensions of the Basic Analysis	p. 419
4.1 Transactions Frictions	p. 420
4.2 The Zero Interest-Rate Lower Bound	p. 427
4.3 Asymmetric Disturbances	p. 435
4.4 Sticky Wages and Prices	p. 443
4.5 Time-Varying Tax Wedges or Markups	p. 448
5 The Case of Larger Distortions	p. 455
Chapter 7 Gains from Commitment to a Policy Rule	p. 464
1 The Optimal Long-Run Inflation Target	p. 468
1.1 The Inflationary Bias of Discretionary Policy	p. 469
1.2 Extensions of the Basic Analysis	p. 476
2 Optimal Responses to Disturbances	p. 484
2.1 Cost-Push Shocks	p. 486
2.2 Fluctuations in the Natural Rate of Interest	p. 501
3 Optimal Simple Policy Rules	p. 507
3.1 The Optimal Noninertial Plan	p. 510
3.2 The Optimal Taylor Rule	p. 513
4 The Optimal State-Contingent Instrument Path as a Policy Rule	p. 517
5 Commitment to an Optimal Targeting Rule	p. 521
5.1 Robustly Optimal Target Criteria	p. 522
5.2 Implementation of a Target Rule	p. 527
Chapter 8 Optimal Monetary Policy Rules	p. 534
1 A General Linear-Quadratic Framework	p. 535
1.1 Optimal State-Contingent Paths	p. 536
1.2 Alternative Forms of Policy Rules	p. 543
1.3 Robustness to Alternative Types of Disturbances	p. 547
1.4 Existence of Robustly Optimal Policy Rules	p. 550
1.5 Optimal Instrument Rules	p. 555
2 Optimal Inflation Targeting Rules	p. 559
2.1 A Model with Inflation Inertia	p. 560
2.2 A Model with Wages and Prices Both Sticky	p. 565
2.3 A Model with Habit Persistence	p. 568
2.4 Predetermined Spending and Pricing Decisions	p. 569
2.5 Optimal Policy for a Small Quantitative Model	p. 573
3 Optimal Interest-Rate Rules	p. 582
3.1 An Optimal Rule for the Basic Neo-Wicksellian Model	p. 583
3.2 Consequences of Inflation Inertia	p. 592
3.3 Predetermined Spending and Pricing Decisions	p. 604
3.4 Optimal Policy under Imperfect Information	p. 606
4 Reflections on Currently Popular Policy Proposals	p. 610
4.1 The Taylor Rule	p. 610
4.2 Inflation-Forecast Targeting	p. 619
Appendixes
A Addendum to Chapter 2	p. 627
B Addendum to Chapter 3	p. 656
C Addendum to Chapter 4	p. 656
D Addendum to Chapter 5	p. 687
E Addendum to Chapter 6	p. 692
F Addendum to Chapter 7	p. 709
G Addendum to Chapter 8	p. 716
References	p. 747
Index	p. 765

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Author Notes

Table of Contents