Monetary Policy in a New Keynesian Model with Endogenous Growth

Barbara Annicchiarico () and Lorenza Rossi

No 167, Quaderni di Dipartimento from University of Pavia, Department of Economics and Quantitative Methods

Abstract: We study monetary policy in a New Keynesian (NK) model with endogenous growth and knowledge spillovers external to each firm. We find the following results: (i) technology and government spending shocks have different effects on growth; (ii) disinflationary monetary policies entail positive effects on growth; (iii) the optimal long-run inflation rate is zero; (iv) the Ramsey dynamics implies deviation from full inflation targeting in response to technology and government spending shocks; (v) the optimal operational rule is backward looking and responds to inflation and output deviations from their long-run levels.

Keywords: Monetary Policy; Endogenous Growth; Disinflation; Ramsey Problem; Optimal Simple Rules (search for similar items in EconPapers)
JEL-codes: E32 E52 O42 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2012-02
New Economics Papers: this item is included in nep-fdg, nep-mac and nep-mon
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Citations: View citations in EconPapers (10)

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