05905oam 22014654 450 991096125150332120250426110524.097866138225369781462367962146236796897814527874731452787476978128258659812825865999781451992199145199219X(CKB)3360000000443288(EBL)3014376(SSID)ssj0000940059(PQKBManifestationID)11553618(PQKBTitleCode)TC0000940059(PQKBWorkID)10946752(PQKB)10760485(OCoLC)698585615(IMF)WPIEE2006200(MiAaPQ)EBC3014376(IMF)WPIEA2006200WPIEA2006200(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".9781451864601 1451864604 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 BankingimfBusiness FluctuationsimfCanada: 1913-imfCapital marketimfCentral Banks and Their PoliciesimfConsumptionimfCyclesimfDeflationimfEconomic History: Financial Markets and Institutions: U.SimfEconomic History: MacroeconomicsimfEconomicsimfFinanceimfFinance: GeneralimfFinancial Markets and the MacroeconomyimfFinancial marketsimfFinancial servicesimfGeneral Financial Markets: General (includes Measurement and Data)imfGrowth and Fluctuations: U.SimfHyperinflationimfInflationimfInterest ratesimfInterest Rates: Determination, Term Structure, and EffectsimfMacroeconomicsimfMacroeconomics: ConsumptionimfMonetary PolicyimfNational accountsimfPrice LevelimfPricesimfReal interest ratesimfSavingimfSecurities marketsimfStudies of Particular Policy EpisodesimfWealthimfUnited StatesimfInflation (Finance)Monetary policy.Banks and BankingBusiness FluctuationsCanada: 1913-Capital marketCentral Banks and Their PoliciesConsumptionCyclesDeflationEconomic History: Financial Markets and Institutions: U.S.Economic History: MacroeconomicsEconomicsFinanceFinance: GeneralFinancial Markets and the MacroeconomyFinancial marketsFinancial servicesGeneral Financial Markets: General (includes Measurement and Data)Growth and Fluctuations: U.S.HyperinflationInflationInterest ratesInterest Rates: Determination, Term Structure, and EffectsMacroeconomicsMacroeconomics: ConsumptionMonetary PolicyNational accountsPrice LevelPricesReal interest ratesSavingSecurities marketsStudies of Particular Policy EpisodesWealthBilbiie Florin1815604Straub Roland1815605DcWaIMFBOOK9910961251503321Asset Market Participation, Monetary Policy Rules, and the Great Inflation4371066UNINA