This paper analyzes the optimal behavior of the Central Bank in an economy characterized by balanced growth. We show how trend-growth affects the dynamics of inflation, the preferences of a welfare-maximizing Central Bank and optimal monetary policy. In particular, we show that the optimal monetary policy response to cost-push shocks is not invariant to trend growth, and that countries with lower trend growth have substantially higher incentives to commit to simple rules, both from a welfare and price-stability perspectives.

Mattesini, F., Nistico', S. (2010). Trend growth and optimal monetary policy. JOURNAL OF MACROECONOMICS, 32(3), 797-815 [10.1016/j.jmacro.2010.02.001].

Trend growth and optimal monetary policy

MATTESINI, FABRIZIO;NISTICO', SALVATORE
2010-01-01

Abstract

This paper analyzes the optimal behavior of the Central Bank in an economy characterized by balanced growth. We show how trend-growth affects the dynamics of inflation, the preferences of a welfare-maximizing Central Bank and optimal monetary policy. In particular, we show that the optimal monetary policy response to cost-push shocks is not invariant to trend growth, and that countries with lower trend growth have substantially higher incentives to commit to simple rules, both from a welfare and price-stability perspectives.
2010
Pubblicato
Rilevanza internazionale
Articolo
Sì, ma tipo non specificato
Settore SECS-P/01 - ECONOMIA POLITICA
English
Con Impact Factor ISI
Mattesini, F., Nistico', S. (2010). Trend growth and optimal monetary policy. JOURNAL OF MACROECONOMICS, 32(3), 797-815 [10.1016/j.jmacro.2010.02.001].
Mattesini, F; Nistico', S
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2108/35245
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