EconStor >
Bank of Canada, Ottawa >
Bank of Canada Working Papers >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/53867
  
Title:Optimal monetary policy and price stability over the long-run PDF Logo
Authors:Kryvtsov, Oleksiy
Shukayev, Malik
Ueberfeldt, Alexander
Issue Date:2007
Series/Report no.:Bank of Canada Working Paper 2007,26
Abstract:This paper examines the role of monetary policy in an environment with aggregate risk and incomplete markets. In a two-period overlapping-generations model with aggregate uncertainty and nominal bonds, optimal monetary policy attains the ex-ante Pareto optimal allocation. This policy aims to stabilize the savings rate in the economy via the effect of expected inflation on real returns of nominal bonds. The equilibrium under optimal monetary policy is characterized by positive average inflation and a nonstationary price level. In an application a key finding is that optimal monetary policy combines features of inflation and price-level targeting.
Subjects:Monetary policy framework
JEL:E5
Document Type:Working Paper
Appears in Collections:Bank of Canada Working Papers

Files in This Item:
File Description SizeFormat
529368641.pdf330.08 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/53867

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.