New-Keynesian Models and Monetary Policy: A Reexamination of the Stylized Facts

Ulf Söderström (), Paul Söderlind and Anders Vredin ()

No 511, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: Using an empirical New-Keynesian model with optimal discretionary monetary policy, we calibrate key parameters - the central bank's preference parameters; the degree of forward-looking behavior in the determination of inflation and output; and the variances of inflation and output shocks - to match some broad characteristics of U.S. data. Our preferred parameterizations all imply a small concern for output stability but a large preference for interest rate smoothing, and a small degree of forward-looking behavior in price-setting but a large degree of forward-looking in the determination of output. We provide some intuition for these results and discuss their consequences for practical monetary policy analysis.

Keywords: Interest rate smoothing; central bank objectives; forward-looking behavior (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2002-09-18, Revised 2003-10-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://swopec.hhs.se/hastef/papers/hastef0511.pdf (application/pdf)

Related works:
Journal Article: New‐Keynesian Models and Monetary Policy: A Re‐examination of the Stylized Facts* (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:hastef:0511

Access Statistics for this paper

More papers in SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Helena Lundin ().