Affiliation:
1. Vancouver School of Economics, University of British Columbia (email: )
2. School of Management and Economics, Chinese University of Hong Kong, Shenzhen (email: )
3. Department of Economics, University College London and CEPR (email: )
Abstract
This paper highlights how the presence of a monetary policy cost channel can offer new insights into the relation between monetary policy and inflation when the Phillips curve is quite flat. For instance, we highlight a key condition whereby lax monetary policy can push the economy to a low-inflation trap, and we discuss how, under the same condition, standard policy rules targeting inflation may need to be modified. In the empirical part of the paper, we explore the relevance of the condition that gives rise to these observations. The results support the key condition we emphasize. (JEL E24, E31, E43, E52)
Publisher
American Economic Association
Subject
General Economics, Econometrics and Finance
Reference49 articles.
1. Adjemian, Stéphane, Houtan Bastani, Michel Juillard, Sumudu Kankanamge, Fréderic Karamé, David Kocsis, Junior Maih, et al. 2020. "Dynare: Reference Manual Release 4.6.1" Dynare. https:// www.dynare.org/new-dynare-release/dynare-4.6.1-released/.
2. Impulse Response Estimation by Smooth Local Projections
3. Identifying Modern Macro Equations with Old Shocks*
4. Barth, Marvin J., and Valerie A. Ramey. 2002. "The Cost Channel of Monetary Transmission." In NBER Macroeconomics Annual 2001, Vol. 16, edited by Ben Bernanke and Kenneth Rogoff, 199-256.
5. Beaudry, Paul, Chenyu Hou, and Franck Portier. 2020. "Monetary Policy when the Phillips Curve is Locally Quite Flat." CEPR Discussion Paper 15184.
Cited by
2 articles.
订阅此论文施引文献
订阅此论文施引文献，注册后可以免费订阅5篇论文的施引文献，订阅后可以查看论文全部施引文献