Firm-specific investment, sticky prices and the Taylor principle

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• dc.contributor.author Sveen, Tommy
• dc.contributor.author Weinke, Lutz
• dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
• dc.date.accessioned 2020-05-25T09:27:04Z
• dc.date.available 2020-05-25T09:27:04Z
• dc.date.issued 2004-10-01
• dc.date.modified 2020-05-25T09:20:23Z
• dc.description.abstract According to the Taylor principle a central bank should adjust the nominal interest rate by more than one-for-one in response to changes in current inflation. Most of the existing literature supports the view that by following this simple recommendation a central bank can avoid being a source of unnecessary fluctuations in economic activity. The present paper shows that this conclusion is not robust with respect to the modelling of capital accumulation. We use our insights to discuss the desirability of alternative interest rate rules. Our results suggest a reinterpretation of monetary policy under Volcker and Greenspan: The empirically plausible characterization of monetary policy can explain the stabilization of macroeconomic outcomes observed in the early eighties for the US economy. The Taylor principle in itself cannot.
• dc.format.mimetype application/pdf*
• dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=780
• dc.identifier.citation Journal of Economic Theory Vol. 123, No. 1, pp 21-39, July 2005
• dc.identifier.uri http://hdl.handle.net/10230/632
• dc.language.iso eng
• dc.relation.ispartofseries Economics and Business Working Papers Series; 780
• dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
• dc.subject.keyword sticky prices
• dc.subject.keyword aggregate investment
• dc.subject.keyword monetary policy
• dc.subject.keyword Macroeconomics and International Economics
• dc.title Firm-specific investment, sticky prices and the Taylor principle
• dc.type info:eu-repo/semantics/workingPaper