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Type | Working Paper |
Scope | Discipline-based scholarship |
Title | Nominal and Real Interest Rates during an Optimal Disinflation in New Keynesian Models |
Organization Unit | |
Authors |
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Language |
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Institution | University of Zurich |
Series Name | Working paper series / Institute for Empirical Research in Economics |
Number | No. 352 |
ISSN | 1424-0459 |
Date | 2007 |
Abstract Text | Central bankers' conventional wisdom suggests that nominal interest rates should be raised to implement a lower inflation target. In contrast, I show that the standard New Keynesian monetary model predicts that nominal interest rates should bendecreased to attain this goal. Real interest rates, however, are virtually unchanged. These results also hold in recent vintages of New Keynesian models with sticky wages, price and wage indexation and habit formation in consumption. |
Official URL | http://www.econ.uzh.ch/wp.html |
PDF File | Download from ZORA |
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