Arbeitspapier
Volatility Matters: Taylor Rules and Capital Accumulation
The operational performance of a set of simple monetary pol- icy rules à la Taylor in a model with capital accumulation and nominal and real rigidities is discussed with a special emphasis on the volatility of output, nominal rate and in.ation rate. Within an enriched modelling framework it is shown that output targeting plays a more crucial role than what has been assessed in the current literature for models without capital accumulation. In fact, with a small value of the output targeting coefficient, monetary authority is not completely successfull in stabilizing the volatility of output, nominal rate and inflation rate only by acting on inflation targeting. Moreover, a too strong concerns towards inflation relatively to output translates into a lower ability to control inflation volatility, together with a strong policy reaction with respect to an exogenous shock hitting the economy. Im- pulse response analysis shows that the risk of an excessive concerns towards inflation might end up in counterproductive results on output, after a positive technological shock. The model also shows a better internal propagation mechanism than what has been previously showed. Finally, the results show that it is no longer possible to miss capital accumulation in modelling monetary policy analyses and calls for further generalizations of the existing modelling framework.
- Language
-
Englisch
- Bibliographic citation
-
Series: Quaderni - Working Paper DSE ; No. 512
- Classification
-
Wirtschaft
- Subject
-
Geldpolitik
Regelbindung versus Diskretion
Taylor-Regel
Investition
Volatilität
Inflation
Theorie
USA
- Event
-
Geistige Schöpfung
- (who)
-
Marzo, Massimiliano
- Event
-
Veröffentlichung
- (who)
-
Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE)
- (where)
-
Bologna
- (when)
-
2004
- DOI
-
doi:10.6092/unibo/amsacta/4780
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Marzo, Massimiliano
- Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE)
Time of origin
- 2004
Other Objects (12)
Tinbergen rules the Taylor Rule
Inflation targeting matters! : novel evidence from “ex ante” taylor rules in emerging markets
The perils of Taylor Rules
Taylor rule estimation by OLS
Taylor Rules and Macroeconomic Instability
Liquidity Traps with Global Taylor Rules
Forecast uncertainty and the Taylor rule
The Taylor Rule: A Spurious Regression?
Sticky information and the Taylor rule
Aid, volatility and growth again: When aid volatility matters and when it does not
Communication Matters: U.S. Monetary Policy and Commodity Price Volatility
Communication matters: US monetary policy and commodity price volatility
Tinbergen rules the Taylor Rule
Inflation targeting matters! : novel evidence from “ex ante” taylor rules in emerging markets
The perils of Taylor Rules
Taylor rule estimation by OLS
Taylor Rules and Macroeconomic Instability
Liquidity Traps with Global Taylor Rules
Forecast uncertainty and the Taylor rule
The Taylor Rule: A Spurious Regression?
Sticky information and the Taylor rule
Aid, volatility and growth again: When aid volatility matters and when it does not
Communication Matters: U.S. Monetary Policy and Commodity Price Volatility
Communication matters: US monetary policy and commodity price volatility
Tinbergen rules the Taylor Rule
Inflation targeting matters! : novel evidence from “ex ante” taylor rules in emerging markets
The perils of Taylor Rules
Taylor rule estimation by OLS
Taylor Rules and Macroeconomic Instability
Liquidity Traps with Global Taylor Rules
Forecast uncertainty and the Taylor rule
The Taylor Rule: A Spurious Regression?
Sticky information and the Taylor rule
Aid, volatility and growth again: When aid volatility matters and when it does not
Communication Matters: U.S. Monetary Policy and Commodity Price Volatility