Persistent Habits, optimal Monetary Policy Inertia and Interest Rate Smoothing

L. Corrado, S. Holly & M. Raissi
Dynamic stochastic general equilibrium models featuring imperfect competition and nominal rigidities have become central for the analysis of the monetary transmission mechanism and for understanding the conduct of monetary policy. However, it is agreed that the benchmark model fails to generate the persistence of output and inflation that is observed in the data. Moreover, it cannot provide a theoretically well-grounded justification for the interest rate smoothing behaviour of monetary authorities. This paper attempts to overcome...
This data repository is not currently reporting usage information. For information on how your repository can submit usage information, please see our documentation.