Arbeitspapier
Optimising indexation arrangements under Calvo contracts and their implications for monetary policy
This paper investigates optimal indexation in the New Keynesian model, when the indexation choice includes the possibility of partial indexation and of varying weights on rational and lagged indexation. It Önds that the Calvo contract adjusted for rationally expected indexation under both ináation and price level targeting regimes delivers the highest expected welfare under both restricted and full current information. Rational indexation eliminates the e§ectiveness of monetary policy on welfare when there is only price-level targeting under the current micro information. If including both wage setting and full current information, monetary policy is e§ective; and a price-level targeting rule delivers the highest beneÖts because it minimises the size of shocks to prices and thus dispersion. However, even less than full rational indexation ensures that there is very little nominal rigidity in the adapted world of Calvo contracts.
- Language
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Englisch
- Bibliographic citation
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Series: Cardiff Economics Working Papers ; No. E2007/7
- Classification
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Wirtschaft
Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Monetary Policy
- Subject
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optimal indexation
price-level target
inflation target
Calvo contracts
rational expectation
New Keynesian model
Vertragstheorie
Geldpolitik
Inflation Targeting
Indexierung
Wohlfahrtsanalyse
Rationale Erwartung
Neukeynesianische Makroökonomik
- Event
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Geistige Schöpfung
- (who)
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Vo Phuong Mai Le
Minford, Patrick
- Event
-
Veröffentlichung
- (who)
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Cardiff University, Cardiff Business School
- (where)
-
Cardiff
- (when)
-
2007
- 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
- Vo Phuong Mai Le
- Minford, Patrick
- Cardiff University, Cardiff Business School
Time of origin
- 2007
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