Optimal Monetary Policy Rules in an Estimated Sticky-Information Model

Ricardo Reis

American Economic Journal: Macroeconomics, 2009, vol. 1, issue 2, pages 1-28

Abstract: This paper uses a dynamic stochastic general equilibrium (DSGE) model with sticky information as a laboratory to study monetary policy. It characterizes the model's predictions for macro dynamics and optimal policy at prior parameters, and then uses data on five US macroeconomic series to update the parameters and provide an estimated model that can be used for policy analysis. The model answers a few policy questions. How does sticky information affect optimal monetary policy? What is the optimal interest rate rule? What is the optimal elastic price-level targeting rule? How does parameter uncertainty affect optimal policy? Are the conclusions for the Euro area different? (JEL E13, E31, E43, E52)

Date: 2009

Downloads: (external link)
http://hdl.handle.net/10.1257/mac.1.2.1 (text/html)
http://www.aeaweb.org/articles.php?doi=10.1257/mac.1.2.1 (application/pdf)
http://www.aeaweb.org/aej/mac/data/2008-0077_data.zip dataset accompanying article (application/zip)
Access to full text is restricted to AEA members.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:aea:aejmac:v:1:y:2009:i:2:p:1-28

Ordering information: This journal article can be ordered from
http://www.aeaweb.org/subscribe.html

Access Statistics for this article

American Economic Journal: Macroeconomics is edited by Steven J. Davis

More articles in American Economic Journal: Macroeconomics from American Economic Association
Contact information at EDIRC.
Series data maintained by Christopher F. Baum ().