## Using monetary policy to stabilize economic activity,” Federal (2009)

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@MISC{Walsh09usingmonetary,

author = {Carl E. Walsh},

title = {Using monetary policy to stabilize economic activity,” Federal},

year = {2009}

}

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### Abstract

Indeed, one of the first lessons one learns from studying a variety of hypothetical models is that the problem of economic stabilization is, even in principle, an extremely intricate one, and that a much more thorough investigation of both theoretical principles and empirical relationships would be needed before detailed policy recommendations could be justified. ” A. W. Phillips (1957, reprinted 1965, p. 677)

### Citations

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1314 | The Science of Monetary Policy: A New Keynesian Perspective - Clarida, Gaĺı, et al. - 1999 |

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856 | Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy
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(Show Context)
Citation Context ...art dynamic stochastic general equilibrium (DSGE) models estimated using Bayesian techniques are proliferating globally and being integrated into policy analysis (e.g., Smets and Wouters, 2003, 2007; =-=Christiano, Eichenbaum, and Evans, 2005-=-; Aldofson, et al. 2007). The expectational IS curve and the new Keynesian t+ 1 t t (1) (2)248 Carl E. Walsh Phillips curve are at the core of these models, and many policy insights have come from th... |

731 | Inside the black Box : The credit channel of monetary policy transmission - Bernanke, Gertler - 1995 |

474 | An Estimated Dynamic Stochastic General Equilibrium Model of the Euro Area - Smets, Wouters - 2003 |

438 |
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Citation Context ...tions. Both sides emphasized that shifts in portfolio composition generated by open market operations required adjustments in relative returns and asset prices to restore equilibrium. (Meltzer, 1995; =-=Tobin, 1969-=-; Goodfriend, 2000). Disagreement focused on the range of assets that were potential substitutes for money holding in private portfolios. Monetarists emphasized that the process of portfolio rebalanci... |

351 |
Monetary Theory and Policy
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(Show Context)
Citation Context ... combines the assumption of dynamic optimizing behavior by private agents with nominal rigidities (e.g., Clarida, Galí, and Gertler, 1999; Woodford, 2003; Galí and Gertler, 2007; Galí, 2008; see also =-=Walsh, 2010-=-, chapter 8). This model can be summarized by two relationships that represent first-order approximation to the general equilibrium conditions for the economy. The first, an expectational investment s... |

335 | Shocks and Frictions in - Smets, Wouters - 2007 |

282 | House Prices, Borrowing Constraints and Monetary policy in - Iacoviello - 2005 |

242 | Nominal Rigidities and the Dynamic E¤ects of a Shock to Monetary Policy. Working Paper 01-07, Federal Reserve Bank of Cleveland - Christiano, Eichenbaum, et al. - 2001 |

212 | Implementing optimal policy through inflation-forecast targeting,” manuscript
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(Show Context)
Citation Context ...icy to Stabilize Economic Activity 273 If monetary policy affects the economy with a lag, optimal policy involves adjusting the policy instrument to ensure the expected value of this condition holds (=-=Svensson and Woodford, 2005-=-), or: ⎡ ⎢ ⎣ λ + κ ⎛ ⎞ ⎝ ⎠ Εt πt+ i ⎜ ⎟ xt+ i − xt+− i ⎤ ⎥ = ⎦ ( 1) 0. (10) Thus, the evolution of inflation and the output gap under an optimal policy is given by the joint solution to (1), (2), and ... |

170 | Three Lessons for Monetary Policy in a Low-Inflation Era - Reifschneider, Williams |

165 | 2003), “An estimated dynamic stochastic general equilibrium model of the euro area - Smets, Wouters |

160 | Forecasting Output and Inflation: The Role of Asset Prices - Stock, Watson - 2003 |

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90 | 2004 a. „Optimal Monetary Policy Under Commitment with a Zero Bound
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Citation Context ...ll-scale calibrated models and the FRB/U.S. model imply central banks should move aggressively to cut the policy rate. 6 This is true in forward-looking models under optimal commitment or discretion (=-=Adams and Billi, 2006-=-, 2007; Nakov, 2008). The need for aggressive responses to natural rate shocks is even more pronounced in models in which actual inflation depends on lagged inflation or in backward-looking models (Ad... |

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83 | Overcoming the Zero Bound on Interest Rate Policy - Goodfriend |

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73 | Speed Limit Policies: The Output Gap and Optimal Monetary Policy - Walsh - 2003 |

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66 | Evaluating an Estimated New Keynesian Small Open Economy Model - Adolfson, Laséen, et al. |

63 | The Case for Open-Market Purchases in a Liquidity Trap - Auerbach, Obstfeld |

62 | 2002) ”Asset Prices in a Flexible Inflation Targeting Framework”, NBER w.p - Cecchetti, Genberg, et al. |

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60 | Staggered Prices and Trend Ination: Some Nuisances,Review of Economic Dynamics - Ascari - 2004 |

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50 | 2007): "Shocks and Frictions in US Business Cycles: a Bayesian DSGE Approach - Smets, Wouters |

48 | How the World Achieved Consensus on Monetary Policy - Goodfriend |

40 | Monetary policy when the nominal short-term interest rate is zero, mimeo - Clouse, Henderson, et al. - 2000 |

37 | New Keynesian Models: Not Yet Useful for Policy Analysis - Chari, Kehoe, et al. |

36 | 2009), “A Model of Unconventional Monetary Policy - Gertler, Karadi |

34 | Discretionary Monetary Policy and the Zero Lower Bound on Nominal Interest Rates
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(Show Context)
Citation Context ...06, 2007; Nakov, 2008). The need for aggressive responses to natural rate shocks is even more pronounced in models in which actual inflation depends on lagged inflation or in backward-looking models (=-=Adams and Billi, 2007-=-; Nishiyama, 2009). Thus, the available research does not support the idea that central banks should conserve their ammunition to avoid hitting the ZLB prematurely.252 Carl E. Walsh To see why an agg... |

34 | New Keynesian models, durable goods and collateral constraints”, unpublished Bocconi University working paper presented at the Deutsche Bundesbank–ZEW Mannheim conference on the Relation between monetary policy and financial markets - Monacelli - 2006 |

34 | 2008): Monetary Policy, Ination, and the Business Cycle. An Introduction to the New Keynesian Framework and its Monetary Policy Applications - Galí |

34 | Implementing optimal policy through ination-forecast targeting - Svensson, Woodford - 2005 |

31 | Macroeconomic modeling for monetary policy evaluation - Gali, Gertler - 2007 |

31 | Monetary Policy and Asset Prices Revisited”, speech at the Cato Institute’s Twenty-sixth Annual Monetary Policy Conference - Kohn - 2008 |

30 | Optimal Monetary Policy at the Zero-Interest-Rate Bound - Jung, Teranishi, et al. |

29 | Stabilisation Policy and the Time-form of Lagged Responses - Phillips - 1957 |

28 | Hybrid Inflation and Price-Level Targeting - Batini, Nelson, et al. - 2003 |