Monetary policy regimes and inflation in the new-Keynesian model

Bartholomew Moore

Journal of Macroeconomics, 2014, vol. 40, issue C, 323-337

Abstract: This paper shows that plausible modifications to the Taylor rule for monetary policy can help explain several empirical anomalies to the behavior of inflation in the new-Keynesian general equilibrium model. The key anomalies considered are (1) the persistence of inflation, both in reduced form and after conditioning on inflation’s driving processes, (2) the positive correlation between the output gap and the change in the inflation rate, and (3) the apparent bias in survey measures of expected inflation.

Keywords: Monetary policy; Markov switching; Inflation persistence; Expectations (search for similar items in EconPapers)
JEL-codes: D84 E51 E52 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:40:y:2014:i:c:p:323-337

DOI: 10.1016/j.jmacro.2014.01.011

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