Front Matter Page
Monetary and Capital Markets Department
Contents
I. Introduction
Related Literature
Roadmap
II. Model
A. Households
B. Production
C. Labor market and wage setting
D. Banks
E. Market clearing conditions and aggregation
III. Data and Estimation
IV. Monetary Policy Design
V. Quantitative Results
A. Dual mandate
B. A financial extension to the mandate
C. Discussion of findings
D. Interest rate smoothing
VI. Conclusion
Figures
Figure 1. Welfare losses of a dual mandate relative to Ramsey
Figure 2. The monetary policy frontier under a dual mandate
Figure 3. The volatility of welfare-relevant variables under a dual mandate
Figure 4. Welfare losses under extended mandates
Figure 5. Policy frontiers for the financial stabilization objective
Figure 6. Policy frontiers for the output gap stabilization objective
Figure 7. Dual mandate with alternative resource utilization measures
Figure 8. The role of mark-up shocks
Figure 9. Volatility as a function of the weight on interest rate smoothing
Tables
Table 1. Data series, data transformations, and assumptions on measurement error
Table 2. Calibrated parameters and steady state targets
Table 3. Prior and posterior distributions of estimated parameters
Table 4. Performance of optimal dual and extended mandates
Table 5. Performance of optimal dual and extended mandates for alternative measures in the mandate
Table 6. The role of shocks
Table 7. The role of interest rate smoothing
Appendixes
Appendix A. Model
A.1. Households
A.2. Production
A.3. Labor market and wage setting
A.4. Banking system
A.5. Market clearing conditions and aggregation
Appendix B. Complete Set of Equilibrium Conditions
B.1. Main equations Definitions:
B.2. The potential allocation
Appendix C. Steady State
C.1. The distorted economy
Appendix D. The Linearized Model
Appendix E. Estimation
Appendix F. Additional Results