@techreport{Faia2009Oligopolistic,
abstract = {The literature has shown that product market frictions and firms dynamic play a crucial role in reconciling standard DSGE with several stylized facts. This paper studies optimal monetary policy in a DSGE model with sticky prices and oligopolistic competition. In this model firms' monopolistic rents induce both intra-temporal and intertemporal time-varying wedges which induce inefficient fluctuations of employment and consumption. The monetary authority faces a trade-off between stabilizing inflation and reducing inefficient fluctuations, which is resolved by using consumer price inflation as a state contingent sale subsidy. An analysis of the welfare gains of alternative rules show that targeting mark-ups and asset prices might improve upon a strict inflation targeting.},
address = {Kiel},
author = {Ester Faia},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {E3; E5; 330; Product market frictions; oligopolistic competition; optimal monetary policy; Geldpolitik; Dynamisches Gleichgewicht; Allgemeines Gleichgewicht; Stochastischer Prozess; Oligopol; Preisrigidit\"{a}t; Theorie},
language = {eng},
number = {1552},
publisher = {Kiel Institute for the World Economy (IfW)},
title = {Oligopolistic competition and optimal monetary policy},
type = {Kiel working paper},
url = {http://hdl.handle.net/10419/28379},
year = {2009}
}
