Household heterogeneity and the performance of monetary policy frameworks

Arbeitspapier

We compare the performance of alternative monetary policy frameworks (inflation targeting, average inflation targeting, price level targeting and nominal GDP level targeting) in a tractable HANK model where incomplete financial markets and idiosyncratic earnings risk introduce precautionary savings and consumption inequality. Financial market incompleteness generates an additional source of societal welfare loss due to cyclical fluctuations in inequality on top of those from inflation and output volatility. We find that history-dependent policies are preferred in this framework. However, if central banks put a high weight on curbing inequality, AIT and IT can be preferred over PLT.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Bank of Canada Staff Working Paper ; No. 2022-12

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Personal Income, Wealth, and Their Distributions ; Incomplete Markets ; Macroeconomics: Consumption; Saving; Wealth ; Price Level; Inflation; Deflation ; Monetary Policy ; Central Banks and Their Policies
• Thema: Monetary policy framework ; Monetary policy transmission ; Monetary policy anduncertainty ; Economic models

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Djeutem, Edouard ; He, Mario ; Reza, Abeer ; Zhang, Yang
• Ereignis: Veröffentlichung
• (wer): Bank of Canada
• (wo): Ottawa
• (wann): 2022

Weitere Informationen

• DOI: doi:10.34989/swp-2022-12
• Handle: http://hdl.handle.net/10419/261265
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ