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

Giovanni Di Bartolomeo () and Carolina Serpieri

No 249, Working Papers in Public Economics from Department of Economics and Law, Sapienza University of Roma

Abstract: We investigate the behavior of central banks in seven advanced economies, focusing on how observed monetary policies align with optimal ones as determined by model-consistent welfare measures. Our approach stands out by emphasizing the importance of inertia’s impact on the output gap and the dynamics of prices and wages. We incorporate inertia into our model using duration-dependent adjustments. By integrating this aspect into a simple New Keynesian model, our analysis aims to identify shared patterns and distinctive features in the monetary policy approach of central banks 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: 47
Date: 2024-06
New Economics Papers: this item is included in nep-ban, nep-dge, nep-inv and nep-mon
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Journal Article: Optimal monetary policy and the time-dependent price and wage Phillips curves: An international comparison (2024)
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