Monetary policy in the new-Keynesian model: An application to the Euro-Area

Cindy Moons, Harry Garretsen, Bas van Aarle and Jorge Fornero

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: This paper analyses monetary policy in a stylized new-Keynesian model. A number of issues are focused upon: (i) optimal monetary policy under commitment or discretion vs. ad-hoc monetary policy based on simple rules, (ii) the effects of fiscal policies and foreign variables on monetary policy, (iii) the effects of fiscal deficit and interest rate smoothing objectives and the amount of forward-looking in the model. The model is estimated for the Euro-Area. Using simulations of the estimated model, it is analyzed how these aspects might affect monetary policy of the ECB and macro-economic fluctuations in the Euro-Area.

Keywords: Fiscal policy; Monetary policy (search for similar items in EconPapers)
JEL-codes: F31 F41 G15 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2007-06
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Journal Article: Monetary policy in the New-Keynesian model: An application to the Euro Area (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ant:wpaper:2007014

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