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Central Banks Going Long

Ricardo Reis

No 6998, CESifo Working Paper Series from CESifo Group Munich

Abstract: Central banks have sometimes turned their attention to long-term interest rates as a target or as a diagnosis of policy. This paper describes two historical episodes when this happened - the US in 1942-51 and the UK in the 1960s - and uses a model of inflation dynamics to evaluate monetary policies that rely on going long. It concludes that these policies for the most part fail to keep inflation under control. A complementary methodological contribution is to re-state the classic problem of monetary policy through interest-rate rules in a continuous-time setting where shocks follow diffusions in order to integrate the endogenous determination of inflation and the term structure of interest rates.

Keywords: Taylor rule; yield curve; pegs; ceilings; affine models (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
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Chapter: Central Banks Going Long (2019) Downloads
Working Paper: Central Banks Going Long (2018) Downloads
Working Paper: Central Banks Going Long (2018) Downloads
Working Paper: Central banks going long (2018) Downloads
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