Sustainable monetary policy and inflation expectations

Armenter Roc ()
Additional contact information
Armenter Roc: Federal Reserve Bank of Philadelphia, Pennsylvania, USA

The B.E. Journal of Macroeconomics, 2016, vol. 16, issue 2, 301-334

Abstract: The short-term nominal interest rate can anchor private-sector expectations into low inflation – more precisely, into the best equilibrium reputation can sustain. I introduce nominal asset markets in an infinite horizon version of the Barro-Gordon model and characterize the subset of sustainable policies compatible with any given asset price system at date t=0. While there are usually many sustainable inflation paths associated with a given set of asset prices, the best sustainable inflation path is implemented if and only if the short-term nominal bond is priced at a certain discount rate at date t=0.

Keywords: Inflation; monetary policy; reputation (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/bejm-2014-0166 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

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: https://EconPapers.repec.org/RePEc:bpj:bejmac:v:16:y:2016:i:2:p:301-334:n:4

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/bejm/html

DOI: 10.1515/bejm-2014-0166

Access Statistics for this article

The B.E. Journal of Macroeconomics is currently edited by Arpad Abraham and Tiago Cavalcanti

More articles in The B.E. Journal of Macroeconomics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().