| 来源类型 | Discussion paper |
| 规范类型 | 论文 |
| 来源ID | DP7892 |
| DP7892 Monetary Policy Mistakes and the Evolution of Inflation Expectations | |
| Athanasios Orphanides; John C Williams | |
| 发表日期 | 2010-06-01 |
| 出版年 | 2010 |
| 语种 | 英语 |
| 摘要 | What monetary policy framework, if adopted by the Federal Reserve, would have avoided the Great Inflation of the 1960s and 1970s? We use counterfactual simulations of an estimated model of the U.S. economy to evaluate alternative monetary policy strategies. We show that policies constructed using modern optimal control techniques aimed at stabilizing inflation, economic activity, and interest rates would have succeeded in achieving a high degree of economic stability as well as price stability only if the Federal Reserve had possessed excellent information regarding the structure of the economy or if it had acted as if it placed relatively low weight on stabilizing the real economy. Neither condition held true. We document that policymakers at the time both had an overly optimistic view of the natural rate of unemployment and put a high priority on achieving full employment. We show that in the presence of realistic informational imperfections and with an emphasis on stabilizing economic activity, an optimal control approach would have failed to keep inflation expectations well anchored, resulting in highly volatile inflation during the 1970s. Finally, we show that a strategy of following a robust first-difference policy rule would have been highly successful in the presence of informational imperfections. This robust monetary policy rule yields simulated outcomes that are close to those seen during the period of the Great Moderation starting in the mid-1980s. |
| 主题 | International Macroeconomics |
| 关键词 | Great inflation Rational expectations Robust control Model uncertainty Natural rate of unemployment |
| URL | https://cepr.org/publications/dp7892 |
| 来源智库 | Centre for Economic Policy Research (United Kingdom) |
| 资源类型 | 智库出版物 |
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/536729 |
| 推荐引用方式 GB/T 7714 | Athanasios Orphanides,John C Williams. DP7892 Monetary Policy Mistakes and the Evolution of Inflation Expectations. 2010. |
| 条目包含的文件 | 条目无相关文件。 | |||||
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