| 来源类型 | Discussion paper
|
| 规范类型 | 论文
|
| 来源ID | DP17232
|
| DP17232 Supply or Demand? Policy Makers’ Confusion in the Presence of Hysteresis |
| Antonio Fatas; Sanjay Singh
|
| 发表日期 | 2022-04-18
|
| 出版年 | 2022
|
| 语种 | 英语
|
| 摘要 | Policy makers need to separate between temporary demand-driven shocks and permanent shocks in order to design optimal aggregate demand policies. In this paper we study the case of a central bank that ignores the presence of hysteresis when identifying shocks. By assuming that all low-frequency output fluctuations are driven by permanent technology shocks, monetary policy is not aggressive enough in response to demand shocks. In addition, we show that errors in assessing the state of the economy can be self-perpetuating if seen through the lens of the mistaken views of the policy maker. We show that a central bank that mistakes a demand shock for a supply shock, will produce permanent effects on output through their suboptimal policies. Ex-post, the central bank will see an economy that resembles what they had forecast when designing their policies. The shock is indeed persistent and this persistence validates their assumption that the shock was a supply-driven one. The interaction between forecasts, policies and hysteresis creates the dynamics of self-perpetuating errors that is the focus of this paper. |
| 主题 | Monetary Economics and Fluctuations
|
| 关键词 | Potential output
Hysteresis
Stabilization policy
Business cycles
|
| URL | https://cepr.org/publications/dp17232
|
| 来源智库 | Centre for Economic Policy Research (United Kingdom)
|
| 资源类型 | 智库出版物
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| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/546234
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推荐引用方式
GB/T 7714 |
Antonio Fatas,Sanjay Singh. DP17232 Supply or Demand? Policy Makers’ Confusion in the Presence of Hysteresis. 2022.
|
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