Arbeitspapier

Limited Asset Market Participation: Does it Really Matter for Monetary Policy?

We study the design of monetary policy in an economy characterized by staggered wage and price contracts together with limited asset market participation (LAMP). Contrary to previous results, we find that once nominal wage stickiness, an incontrovertible empirical fact, is considered: i) the Taylor Principle is restored as a necessary condition for equilibrium determinacy for any empirically plausible degree of LAMP; ii) the effect of LAMP for the design of optimal monetary policy are minor; iii) optimal interest rate rules become active no matter the degree of asset market participation. For this reasons we argue that LAMP does not matter much for monetary policy.

Sprache
Englisch

Erschienen in
Series: Quaderni di Dipartimento ; No. 124

Klassifikation
Wirtschaft
Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Monetary Policy
Thema
optimal monetary policy
sticky wages
non-Ricardian household
determinacy
optimal simple rules

Ereignis
Geistige Schöpfung
(wer)
Ascari, Guido
Colciago, Andrea
Rossi, Lorenza
Ereignis
Veröffentlichung
(wer)
Università degli Studi di Pavia, Dipartimento di Economia Politica e Metodi Quantitativi (EPMQ)
(wo)
Pavia
(wann)
2010

Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Ascari, Guido
  • Colciago, Andrea
  • Rossi, Lorenza
  • Università degli Studi di Pavia, Dipartimento di Economia Politica e Metodi Quantitativi (EPMQ)

Entstanden

  • 2010

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