05706oam 22013814 450 991080928090332120240410162439.01-4623-6796-81-4527-8747-61-282-58659-997866138225361-4519-9219-X(CKB)3360000000443288(EBL)3014376(SSID)ssj0000940059(PQKBManifestationID)11553618(PQKBTitleCode)TC0000940059(PQKBWorkID)10946752(PQKB)10760485(OCoLC)698585615(IMF)WPIEE2006200(MiAaPQ)EBC3014376(EXLCZ)99336000000044328820020129d2006 uf 0engur|n|---|||||txtccrAsset Market Participation, Monetary Policy Rules, and the Great Inflation /Florin Bilbiie, Roland Straub1st ed.Washington, D.C. :International Monetary Fund,2006.1 online resource (34 p.)IMF Working Papers"September 2006".1-4518-6460-4 Includes bibliographical references.""Contents""; ""I. Introduction""; ""II. Limited Asset Market Participation and Monetary Policy: Some Theory""; ""III. Empirical Evidence""; ""IV. Change in Structure of Economy or in Distribution of Shocks?""; ""V. Conclusions""; ""General Model""This paper argues that limited asset market participation is crucial in explaining U.S. macroeconomic performance and monetary policy before the 1980s, and their changes thereafter. We develop an otherwise standard sticky-price dynamic stochastic general equilibrium model, which implies that at low asset-market participation rates, the interest rate elasticity of output (the slope of the IS curve) becomes positive - that is, "non-Keynesian." Remarkably, in that case, a passive monetary policy rule ensures equilibrium determinacy and maximizes welfare. Consequently, we argue that the policy of the Federal Reserve System in the pre-Volcker era, often associated with a passive monetary policy rule, was closer to optimal than conventional wisdom suggests and may thus have remained unchanged at a fundamental level thereafter. We provide institutional and empirical evidence for our hypothesis, in the latter case using Bayesian estimation techniques, and show that our model is able to explain most features of the "Great Inflation.".IMF Working Papers; Working Paper ;No. 2006/200Inflation (Finance)Monetary policyBanks and BankingimfFinance: GeneralimfInflationimfMacroeconomicsimfPrice LevelimfDeflationimfBusiness FluctuationsimfCyclesimfFinancial Markets and the MacroeconomyimfMonetary PolicyimfCentral Banks and Their PoliciesimfStudies of Particular Policy EpisodesimfEconomic History: MacroeconomicsimfGrowth and Fluctuations: U.SimfCanada: 1913-imfEconomic History: Financial Markets and Institutions: U.SimfGeneral Financial Markets: General (includes Measurement and Data)imfMacroeconomics: ConsumptionimfSavingimfWealthimfInterest Rates: Determination, Term Structure, and EffectsimfFinanceimfSecurities marketsimfConsumptionimfHyperinflationimfReal interest ratesimfFinancial marketsimfPricesimfNational accountsimfFinancial servicesimfCapital marketimfEconomicsimfInterest ratesimfUnited StatesimfInflation (Finance)Monetary policy.Banks and BankingFinance: GeneralInflationMacroeconomicsPrice LevelDeflationBusiness FluctuationsCyclesFinancial Markets and the MacroeconomyMonetary PolicyCentral Banks and Their PoliciesStudies of Particular Policy EpisodesEconomic History: MacroeconomicsGrowth and Fluctuations: U.S.Canada: 1913-Economic History: Financial Markets and Institutions: U.S.General Financial Markets: General (includes Measurement and Data)Macroeconomics: ConsumptionSavingWealthInterest Rates: Determination, Term Structure, and EffectsFinanceSecurities marketsConsumptionHyperinflationReal interest ratesFinancial marketsPricesNational accountsFinancial servicesCapital marketEconomicsInterest ratesBilbiie Florin1630683Straub Roland1630684DcWaIMFBOOK9910809280903321Asset Market Participation, Monetary Policy Rules, and the Great Inflation3969122UNINA