Technological Shocks and the Conduct of Monetary Policy

Mario Amendola (), Jean-Luc Gaffard and Francesco Saraceno ()
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Mario Amendola: UNIROMA - Università degli Studi di Roma "La Sapienza" = Sapienza University [Rome]

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Abstract: This paper analyses the impact of alternative monetary policies on the performances of an economy facing technological changes. It shows that the restructuring of productive capacity necessary to embed the new technologies usually implies initial drops in employment and productivity, that are reabsorbed only if the transition is successful. Furthermore, it shows that the process disrupts the financial structure of firms (the coordination over time of costs and revenues), and makes external financing crucial for a successful restructuring. An "optimal" monetary policy, in this framework, should then be expansionary during the transition, and tighten once the technological advance is embedded in the system. Thus, we reach conclusions that are in sharp contrast with the policy prescriptions of the New Keynesian approach.

Date: 2004-11
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Published in Revue Economique, 2004, 55 (6), pp.1241 - 1263. ⟨10.3917/reco.556.1241⟩

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Journal Article: Technological Shocks and the Conduct of Monetary Policy (2004)
Working Paper: Technological Shocks and the Conduct of Monetary Policy (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-03583043

DOI: 10.3917/reco.556.1241

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