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Saturday, July 18, 2020 | History

3 edition of Imperfect knowledge, inflation expectations, and monetary policy found in the catalog.

Imperfect knowledge, inflation expectations, and monetary policy

Athanasios Orphanides

Imperfect knowledge, inflation expectations, and monetary policy

by Athanasios Orphanides

  • 248 Want to read
  • 10 Currently reading

Published by National Bureau of Economic Research in Cambridge, Mass .
Written in English

    Subjects:
  • Monetary policy -- Econometric models,
  • Monetary policy -- Effect of inflation on -- Econometric models

  • Edition Notes

    StatementAthanasios Orphanides, John C. Williams.
    SeriesNBER working paper series -- no. 9884., Working paper series (National Bureau of Economic Research) -- working paper no. 9884.
    ContributionsWilliams, John C., National Bureau of Economic Research.
    The Physical Object
    Pagination39 p. :
    Number of Pages39
    ID Numbers
    Open LibraryOL17615690M
    OCLC/WorldCa52888707

      In dynamic analysis, inflationary expectations affect agents’ decisions regarding saving and price adjustments, and affect monetary policy behaviour in ways that have become increasingly important. Over time, analysts’ treatment of expectations evolved from distributed-lag, adaptive models to rational expectations, a change that had major. tethering inflation expectations to the central bank’s goal and in so doing achieve superior stabilization of inflation and economic activity in an environment of imperfect knowledge. Keywords: Learning, Natural rate of interest, natural rate of unemployment, rational expectations, monetary policy rules, uncertainty, bond prices.

    expectations, these rules perform somewhat worse than the optimal control policy. The two simple monetary policy rules perform very well under learning and with natural rate mismeasurement. These rules clearly outperform the optimal control policy when knowledge is imperfect and generally perform about as well as the optimal control policies.   Inflation Targeting. Most modern central banks target the rate of inflation in a country as their primary metric for monetary policy - usually at a rate of % annual inflation.

    5. Imperfect Knowledge, Inflation Expectations, and Monetary Policy Athanasios Orphanides and John C. Williams Comment: George W. Evans Discussion Summary. II. Critical Perspectives 6. Does Inflation Targeting Matter? Laurence Ball and Niamh Sheridan Comment: Mark Gertler Discussion Summary 7. Limits to Inflation Targeting Christopher A. SimsPrice: $ Imperfect Common Knowledge and the Effects of Monetary Policy ⁄ Michael Woodford Princeton University Octo Abstract This paper reconsiders the Phelps-Lucas hypothesis, according to which temporary real effects of purely nominal disturbances result from imperfect information about the nature of these disturbances.


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Imperfect knowledge, inflation expectations, and monetary policy by Athanasios Orphanides Download PDF EPUB FB2

The intended policy objective and illustrates the point that the design of monetary policy must account for Imperfect knowledge influence of policy on expectations. We nd that policies designed to be e cient under rational expectations can be quite ine cient when knowledge is imperfect; in particular, the e cient response to inflation.

Get this from a library. Imperfect knowledge, inflation expectations, and monetary policy. [Athanasios Orphanides; John C Williams; National Bureau of Economic Research.]. Imperfect Knowledge, Inflation Expectations, and Monetary Policy Athanasios Orphanides, John Williams.

Chapter in NBER book The Inflation-Targeting Debate (), Ben S. Bernanke and Michael Woodford, editors (p. - ) Conference held January Imperfect knowledge, Published in December by University of Chicago PressCited by: Request PDF | On Jan 1,Athanasios Orphanides and others published Imperfect Knowledge, Inflation Expectations, and Monetary Policy | Find, read and cite all.

"Imperfect knowledge, inflation expectations, and monetary policy," Working Paper SeriesFederal Reserve Bank of San Francisco, revised Athanasios Orphanides & John C.

Williams, "Imperfect Knowledge, Inflation Expectations, and Monetary Policy," NBER Working PapersNational Bureau of Economic Research, Inc. Imperfect Knowledge, Inflation Expectations, and Monetary Policy Athanasios Orphanides, John C.

Williams. NBER Working Paper No. Issued in August NBER Program(s):Monetary Economics This paper investigates the role that imperfect knowledge about the structure of the economy plays in the formation of expectations, macroeconomic dynamics, and the efficient formulation of monetary policy.

Imperfect Knowledge, Inflation Expectations, and Monetary Policy Athanasios Orphanides*, John C. Williams** July Abstract: This paper investigates the role that imperfect knowledge about the structure of the economy plays in the formation of and monetary policy book, macroeconomic dynamics, and the efficient formulation of monetary policy.

public forms expectations and policymakers must formulate and implement monetary policy. Using an estimated model of the U.S. economy, we show that monetary policy rules that would perform well under the assumption of rational expecta-tions can perform very poorly when we introduce imperfect knowledge.

We then examine the performance of an easily. "Imperfect Knowledge, Inflation Expectations, and Monetary Policy," NBER Working PapersNational Bureau of Economic Research, Inc. Orphanides, Athanasios & Williams, John C., "Imperfect knowledge, inflation expectations, and monetary policy," CFS Working Paper Series /40, Center for Financial Studies (CFS).

the rational expectations equilibrium with imperfect common knowledge and section 6 characterizes optimal monetary policy. A conclusion summarizes the main findings. 2 A simple Lucas-type model Consider a flexible price economy with a continuum of monopolistically com-petitive firms i 5[0,1] and a central bank that (imperfectly) controls nominal.

In this scenario, a monetary policy framework that can successfully anchor inflation expectations can reduce or eliminate persistence. To shed further light on the role of expectations this note briefly reviews: (1) factors that can lead to inflation persistence and how a monetary policy framework such as inflation targeting.

Fiscal policy has no monetary consequences. Now suppose agents have imperfect knowledge, modeled as uncertainty about the long-term equilibrium level of in⁄ation and taxes.

Interpret this as either fundamental uncertainty about the policy regime, or imperfect credibility about policy. Finance and Economics Discussion Series: Imperfect Knowledge, Inflation Expectations, and Monetary Policy [Orphanides, Athanasios, Williams, John C., United States Federal Reserve Board] on *FREE* shipping on qualifying offers.

Finance and Economics Discussion Series: Imperfect Knowledge, Inflation Expectations, and Monetary PolicyAuthor: Athanasios Orphanides, John C.

Williams. Imperfect knowledge, inflation expectations, and monetary policy. and the efficient formulation of monetary policy. Economic agents rely on an adaptive learning technology to form expectations and continuously update their beliefs regarding the dynamic structure of the economy based on incoming data.

The process of perpetual learning. time preference and – interestingly – the higher the degree of persistence in inflation expectations. With imperfect knowledge results depend on the learning scheme that is employed.

A novel feature of the passive learning policy - compared to the central bank’s optimal disinflation policy under perfect knowledge.

Monetary Policy Report; Beige Book; The policy implications of the much-improved but still imperfect anchoring of inflation expectations are not at all straightforward. To evaluate these implications, we must understand better the historical variation in inflation expectations, the effect of this variation on actual inflation and economic.

It explores the implications of a simple model where the policy maker has imperfect knowledge about potential output and the private sector forms expectations according to adaptive learning. This lecture shows that imperfect knowledge limits the scope for active stabilization policy and strengthens the case for conservatism.\"--Jacket.

\/span. Inflation expectations and monetary policy Ricardo Sousa and James Yetman1 Abstract Emerging market central banks have come to rely on an increasing number of measures of inflation expectations from a variety of sources.

We highlight some of the empirical limitations of the various measures, and argue that different measures. Imperfect Knowledge, Inflation Expectations, and Monetary Policy Athanasios Orphanides and John C.

Williams Comment: George W. Evans Discussion Summary II. Critical Perspectives 6. Does Inflation Targeting Matter. Laurence Ball and Niamh Sheridan Comment: Mark Gertler Discussion Summary 7. Limits to Inflation Targeting Christopher A.

Sims. Two examples are: Ball, Laurence, N. Gregory Mankiw, and Ricardo Reis, "Monetary Policy for Inattentive Economies," Journal of Monetary Econom Mayand Orphanides, Athanasios, and John C. Williams, "Inflation Targeting under Imperfect Knowledge," Working Paper, Federal Reserve Bank of San Francisco, April.

Based on lectures given as part of The Stone Lectures in Economics, this book discusses the problem of formulating monetary policy in practice, under the uncertain circumstances which characterize the real world.

How should central banks set monetary policy? In which way should they take Author: Vitor Gaspar.The latter events are vivid reminders of how uncertainty, imperfect knowledge, and the need to learn affect macroeconomic behavior and the conduct of monetary policy. Central bank and academic economists conducting research on the design of monetary policy have made significant advances in recent years.Ideally, all of these measures of inflation expectations would be close to the Fed’s target of 2 percent—or percent for those that refer to CPI inflation, which tends to run about 30 basis points higher than PCE inflation.

However, inflation expectations in major inflation-targeting economies have not been running close to target of late.