A Primer on Optimal Monetary Policy with Staggered Price-Setting - Economic Quarterly Fall 2001
Article
A Primer on Optimal Monetary Policy with Staggered Price-Setting
A Primer on Optimal Monetary Policy with Staggered Price-Setting - Economic Quarterly Fall 2001
A Primer on Optimal Monetary Policy with Staggered Price-Setting - Economic Quarterly Fall 2001
Fall
2001
A Primer on Optimal Monetary Policy with Staggered Price-Setting
Alexander L. Wolman {alewol1}
<p>Three notions of optimal monetary policy are applied to a model in which firms set their prices for multiple periods. The best steady state inflation rate is slightly positive, but the policy that maximizes present discounted welfare leads in the long run to zero inflation. If commitment is not feasible, a benevolent monetary authority will choose relatively high inflation.</p>
/RichmondFedOrg/publications/research/economic_quarterly/2001/fall/pdf/wolman.pdf
Inflation & Monetary Policy
1
Inflation
Monetary Policy
<p>Three notions of optimal monetary policy are applied to a model in which firms set their prices for multiple periods. The best steady state inflation rate is slightly positive, but the policy that maximizes present discounted welfare leads in the long run to zero inflation. If commitment is not feasible, a benevolent monetary authority will choose relatively high inflation.</p>
Economic Quarterly
Fall
2001