On the Welfare Costs of Monetary Policy

Jean Blaise Nlemfu Mukoko

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyses the implications of monetary policy changes on the welfare in the U.S economy over the pre-1984 and post-1984 periods. We use a New-Keynesian model with trend inflation based on Ascari, Phaneuf and Sims (2015). First, our results show that the welfare costs respond symmetrically to a rise and a decline in trend inflation, trend growth and the level of volatility of output, output growth and inflation over the sample periods. Second, we find that changes in monetary policy and in trend inflation across the two subsamples play an important role in the shift of macroeconomic variables volatilities unconditionally and conditionally to neutral technology, marginal efficiency of investment and monetary shocks.

Keywords: Welfare; trend in ation; New Keynesian Models (search for similar items in EconPapers)
JEL-codes: E31 E32 (search for similar items in EconPapers)
Date: 2016-06, Revised 2016-07
New Economics Papers: this item is included in nep-cba, nep-ger, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:72479

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