Arbeitspapier
Nominal and real interest rates during an optimal disinflation in New Keynesian models.
Central bankers’ conventional wisdom suggests that nominal interest rates should be raised to implement a lower inflation target. In contrast, I show that the standard New Keynesian monetary model predicts that nominal interest rates should be decreased to attain this goal. Real interest rates, however, are virtually unchanged. These results also hold in recent vintages of New Keynesian models with sticky wages, price and wage indexation and habit formation in consumption.
- Language
-
Englisch
- Bibliographic citation
-
Series: ECB Working Paper ; No. 878
- Classification
-
Wirtschaft
Demand for Money
Interest Rates: Determination, Term Structure, and Effects
Money Supply; Credit; Money Multipliers
Monetary Policy
- Subject
-
Disinflation
nominal and real interest rates
optimal monetary policy
Inflationsbekämpfung
Zins
Lohnrigidität
Preisrigidität
Neoklassische Synthese
Theorie
- Event
-
Geistige Schöpfung
- (who)
-
Hagedorn, Marcus
- Event
-
Veröffentlichung
- (who)
-
European Central Bank (ECB)
- (where)
-
Frankfurt a. M.
- (when)
-
2008
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the 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
- Hagedorn, Marcus
- European Central Bank (ECB)
Time of origin
- 2008
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