The science of monetary policy: A new Keynesian perspective

Richard Clarida, Jordi Galí and Mark Gertler

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: This paper reviews the recent literature on monetary policy rules. We exposit the monetary policy design problem within a simple baseline theoretical framework. We then consider the implications of adding various real world complications. Among other things, we show that the optimal policy implicitly incorporates inflation targeting. We also characterize the gains from making credible commitments to fight inflation. In contrast to conventional wisdom, we show that gains from commitment may emerge even in the central bank is not trying to inadvisedly push output above its natural level. We also consider the implications of frictions such as imperfect information.

Keywords: Monetary policy; credibility; stabilization; new keynesian models (search for similar items in EconPapers)
JEL-codes: E0 E5 (search for similar items in EconPapers)
Date: 1997-09, Revised 1999-04
New Economics Papers: this item is included in nep-mon and nep-pke
References: Add references at CitEc
Citations: View citations in EconPapers (3269)

Downloads: (external link)
https://econ-papers.upf.edu/papers/356.pdf Whole Paper (application/pdf)

Related works:
Journal Article: The Science of Monetary Policy: A New Keynesian Perspective (1999)
Working Paper: The Science of Monetary Policy: A New Keynesian Perspective (1999)
Working Paper: The Science of Monetary Policy: A New Keynesian Perspective (1999)
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:upf:upfgen:356

Access Statistics for this paper

More papers in Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
Bibliographic data for series maintained by ( this e-mail address is bad, please contact ).