The role of bank central operating procedures in an economy with productive government spending
We reexamine some of the issues related to the choice of the monetary policy instrument in a dynamic general equilibrium model exhibiting endogenous growth in which a fraction of productive government spending is Önanced by means of issuing currency. We evaluate the performance of four monetary inst...
| Authors: | , |
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| Format: | article |
| Publication Date: | 2011 |
| Country: | España |
| Institution: | Universitat Autònoma de Barcelona |
| Repository: | Dipòsit Digital de Documents de la UAB |
| Language: | English |
| OAI Identifier: | oai:ddd.uab.cat:174244 |
| Online Access: | https://ddd.uab.cat/record/174244 https://dx.doi.org/urn:doi:10.1007/s10614-010-9198-y |
| Access Level: | Open access |
| Keyword: | Monetary policy targets Productive government spending |
| Summary: | We reexamine some of the issues related to the choice of the monetary policy instrument in a dynamic general equilibrium model exhibiting endogenous growth in which a fraction of productive government spending is Önanced by means of issuing currency. We evaluate the performance of four monetary instruments: monetary aggregate targeting, nominal interest rate targeting, ináation rate targeting and real interest rate targeting. We show that a switch from any other targeting procedure towards the real interest rate targeting may be welfare improving even if the real interest rate targeting is a policy that delivers the most volatile consumption in the short run. |
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