Arbeitspapier
Optimal monetary policy with state-dependent pricing
We study optimal monetary policy in a flexible state-dependent pricing framework, in which monopolistic competition and stochastic menu costs are the only distortions. We show analytically that it is optimal to commit to zero inflation in the long run. Moreover, our numerical simulations indicate that the optimal stabilization policy is "price stability". These findings represent a generalization to a state-dependent framework of the same results found for the simple Calvo model with exogenous timing of price adjustment.
- Language
-
Englisch
- Bibliographic citation
-
Series: ECB Working Paper ; No. 1250
- Classification
-
Wirtschaft
Price Level; Inflation; Deflation
- Subject
-
optimal monetary policy
price stability
state-dependent pricing
stochastic menu costs
Geldpolitik
Preisstabilität
Monopolistischer Wettbewerb
Numerisches Verfahren
Theorie
- Event
-
Geistige Schöpfung
- (who)
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Nakov, Anton
Thomas, Carlos
- Event
-
Veröffentlichung
- (who)
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European Central Bank (ECB)
- (where)
-
Frankfurt a. M.
- (when)
-
2010
- Handle
- Last update
-
10.03.2025, 11:42 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
- Nakov, Anton
- Thomas, Carlos
- European Central Bank (ECB)
Time of origin
- 2010
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