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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/25974
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| Title: | | Monetary policy in a channel system  |
| Authors: | | Berentsen, Aleksander Monnet, Cyril |
| Issue Date: | | 2007 |
| Series/Report no.: | | CESifo working paper 1929 |
| Abstract: | | Channel systems for conducting monetary policy are becoming increasingly popular. Despite their popularity, the consequences of implementing policy with a channel system are not well understood. We develop a general equilibrium framework of a channel system and investigate the optimal policy. A novel aspect of the channel system is that a central bank can tighten or loosen its policy without changing its target rate by increasing the interest-rate spread symmetrically around the target rate. This questions the characterization of optimal policy through interest-rate rules, as done in a large body of the literature on the optimal design of interest-rate rules. |
| Subjects: | | monetary policy interest rates search |
| JEL: | | E40 E50 D83 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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