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

Giovanni Di Bartolomeo () and Carolina Serpieri

Journal of International Money and Finance, 2024, vol. 146, issue C

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)
Date: 2024
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Working Paper: Optimal monetary policy and the time-dependent price and wage Phillips curves: An international comparison (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:146:y:2024:i:c:s0261560624000986

DOI: 10.1016/j.jimonfin.2024.103111

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