Optimal monetary policy in a New Keynesian model with job search☆ Export

@article{citeulike:5884773, abstract = {This paper studies the implications for optimal monetary policy of introducing job search into the New Keynesian framework. Using the linear-quadratic approach described by (2008), we derive a utility-based loss function that indicates that the goals of policymakers can be represented by the stabilization of inflation, output, employment, and labor-market tightness. We characterize the policy that is optimal from a timeless perspective. Complete inflation stabilization is optimal if the distortions caused by monopolistic competition and search externalities are eliminated. In cases where search externalities prevail, either in or out of the steady state, complete inflation stabilization is no longer optimal, and the optimal responses of inflation to aggregate shocks may depend on labor-market fundamentals.}, author = {Tang, Jenn-Hong}, citeulike-article-id = {5884773}, citeulike-linkout-0 = {http://dx.doi.org/10.1016/j.jedc.2009.09.009}, citeulike-linkout-1 = {http://linkinghub.elsevier.com/retrieve/pii/S0165188909001675}, day = {30}, doi = {10.1016/j.jedc.2009.09.009}, issn = {01651889}, journal = {Journal of Economic Dynamics and Control}, month = {September}, posted-at = {2009-10-04 05:40:20}, title = {Optimal monetary policy in a New Keynesian model with job search☆}, url = {http://dx.doi.org/10.1016/j.jedc.2009.09.009}, year = {2009} }

TY - JOUR ID - citeulike:5884773 L3 - citeulike-article-id:5884773 N2 - This paper studies the implications for optimal monetary policy of introducing job search into the New Keynesian framework. Using the linear-quadratic approach described by (2008), we derive a utility-based loss function that indicates that the goals of policymakers can be represented by the stabilization of inflation, output, employment, and labor-market tightness. We characterize the policy that is optimal from a timeless perspective. Complete inflation stabilization is optimal if the distortions caused by monopolistic competition and search externalities are eliminated. In cases where search externalities prevail, either in or out of the steady state, complete inflation stabilization is no longer optimal, and the optimal responses of inflation to aggregate shocks may depend on labor-market fundamentals. JF - Journal of Economic Dynamics and Control SN - 01651889 TI - Optimal monetary policy in a New Keynesian model with job search☆ AU - Tang, Jenn-Hong PY - 2009/09/30/ UR - http://dx.doi.org/10.1016/j.jedc.2009.09.009 ER -