Optimal monetary policy and the vintage-dependent price and wage Phillips curves: An international comparison

Giovanni Di Bartolomeo () and Carolina Serpieri

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: In this study, we compare the conduct of central banks across seven advanced economies by analyzing the relationship between observed and optimal monetary policies. We estimate the New Keynesian Phillips curves for prices and wages and use model-consistent welfare measures to conduct counterfactual analysis. What sets our approach apart is the focus on the impact of inertia on output gaps and price/wage dynamics, which we model using duration-dependent adjustments. Ignoring the effects of inertia on welfare and policies could result in a misleading and incomplete understanding of inflation dynamics. By incorporating this element into our analysis, we aim to identify common trends and specificities in central banks’ monetary policy conduct across different countries.

Keywords: Duration-dependent adjustments; Intrinsic inflation persistence; DSGE models; Hybrid Phillips curves; Optimal policy (search for similar items in EconPapers)
JEL-codes: C11 E31 E32 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2023-03
New Economics Papers: this item is included in nep-cba, nep-dge and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:ant:wpaper:2023004

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