Template-Type: ReDIF-Paper 1.0
Author-Name:  Eurilton Araújo
Author-Name-First: Eurilton
Author-Name-Last: Araújo
Title: Supply-side effects of monetary policy and the central bank’s objective functioncia
Abstract:  This paper considers a new Keynesian model with the cost channel and evaluates the supply-side e§ects of monetary policy on macroeconomic volatility and welfare, taking into account the endogenous nature of the objective function of monetary authorities. When the cost channel matters, supply-side e§ects of monetary policy depend on the degree of interest rate pass-through and the degree of price rigidity.
Numerical results show that the welfare consequences of an increase in the degree of interest rate pass-through are independent of how the
central bank speciÖes its loss function. By contrast, the welfare consequences of an increase in price rigidity depend critically on the nature of the loss function considered. Macroeconomic volatility as a function of the pass-through si almost independent of the central bankís loss function. In contrast, this volatility as a function of the degree of price rigidity depends more on the nature of the loss function.
Length:  21 pages
Creation-Date:  2008
Order-URL: https://repositorio.insper.edu.br/handle/11224/5775
File-URL: https://repositorio.insper.edu.br/handle/11224/5775
File-Format: text/html
File-Function: Full text
Number: 024
Handle: RePEc:aap:wpaper:024