Working Paper
Optimal monetary policy in a model of overlapping price contracts
Abstract: This study estimates a model of overlapping nominal price contracts over three distinct monetary policy regimes, testing the stability of the parameters in the model across regimes. Upon finding a model that is stable over the three subsamples, the model then holds for the most recent monetary regime is used to compute the optimal policy frontier - the efficient combinations of output and inflation variances - and compared to actual policy performance. The study then evaluates the robustness of policy conclusions to particulars of the specification, and discusses the general properties that are required of a model in order to produce a plausible estimate of the optimal policy frontier.
Keywords: Prices; Monetary policy;
Status: Published in Journal of Money, Credit and Banking 29, no. 2 (May 1997): 214-34.
Access Documents
File(s): File format is text/html http://www.bostonfed.org/economic/wp/wp1994/wp94_2.htm
File(s): File format is application/pdf http://www.bostonfed.org/economic/wp/wp1994/wp94_2.pdf
Authors
Bibliographic Information
Provider: Federal Reserve Bank of Boston
Part of Series: Working Papers
Publication Date: 1994
Number: 94-2