Woodford, Michael 1955
Most widely held works by
Michael Woodford
Handbook of monetary economics by Benjamin M Friedman (
Book
)
12
editions published
between
1990
and
2011
in
English and Spanish
and held by
628
libraries
worldwide
Due to the fundamental twoway interaction between the theoretical and the empirical aspects of monetary economics, together with the relationship of both to matters of public policy, any organization of material comprehensively spanning the subject is bound to be arbitrary. The 23 surveys commissioned for this Handbook have been arranged in a way that the editors feel reflects some of the most important logical divisions within the field and together they present a comprehensive account of the current state of the art. The Handbook is an indispensable reference work which should be part of every professional collection, and which makes ideal supplementary reading for graduate economics students on advanced courses
Interest and prices : foundations of a theory of monetary policy by Michael Woodford (
Book
)
12
editions published
between
2003
and
2009
in
English
and held by
591
libraries
worldwide
With the collapse of the Bretton Woods system, any pretense of a connection of the world's currencies to any real commodity has been abandoned. Yet since the 1980's, most central banks have abandoned moneygrowth targets as practical guidelines for monetary policy as well. How then can pure 'fiat' currencies be managed so as to create confidence in the stability of national units of account? "Interest and Prices" seeks to provide theoretical foundations for a rulebased approach to monetary policy suitable for a world of instant communications and ever more efficient financial markets. In such a world, effective monetary policy requires that central banks construct a conscious and articulate account of what they are doing.Michael Woodford reexamines the foundations of monetary economics, and shows how interestrate policy can be used to achieve an inflation target in the absence of either commodity backing or control of a monetary aggregate. This book further shows how the tools of modern macroeconomic theory can be used to design an optimal inflationtargeting regime  one that balances stabilization goals with the pursuit of price stability in a way that is grounded in an explicit welfare analysis, and that takes account of the 'New Classical' critique of traditional policy evaluation exercises. It thus argues that rulebased policymaking need not mean adherence to a rigid framework unrelated to stabilization objectives for the sake of credibility, while at the same time showing the advantages of rulebased over purely discretionary policymaking
Handbook of macroeconomics by Kenneth Joseph Arrow (
Book
)
28
editions published
between
1999
and
2007
in
English and Dutch
and held by
492
libraries
worldwide
This text aims to provide a survey of the state of knowledge in the broad area that includes the theories and facts of economic growth and economic fluctuations, as well as the consequences of monetary and fiscal policies for general economic conditions
The inflationtargeting debate by Ben Bernanke (
Book
)
20
editions published
between
2004
and
2007
in
English
and held by
366
libraries
worldwide
"In The InflationTargeting Debate, a distinguished group of contributors explores the many underexamined dimensions of inflation targeting  its potential, its successes, and its limitations  from both theoretical and empirical standpoints, and for both developed and emerging economies. The volume opens with a discussion of the optimal formulation of inflationtargeting policy and continues with a debate about the desirability of such a model for the United States. The concluding chapters discuss the special problems of inflation targeting in emerging markets, including the Czech Republic, Poland, and Hungary."Jacket
Indicator variables for optimal policy by Lars E. O Svensson (
Book
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34
editions published
between
2000
and
2001
in
English
and held by
118
libraries
worldwide
The optimal weights on indicators in models with partial information about the state of the economy and forwardlooking variables are derived and interpreted, both for equilibria under discretion and under commitment. An example of optimal monetary policy with a partially observable potential output and a forwardlooking indicator is examined. The optimal response to the optimal estimate of potential output displays certaintyequivalence, whereas the optimal response to the imperfect observation of output depends on the noise in this observation
Handbook of macroeconomics by John B Taylor (
Book
)
17
editions published
in
1999
in
English
and held by
95
libraries
worldwide
Annotation
Optimal monetary policy inertia by Michael Woodford (
Book
)
21
editions published
between
1998
and
1999
in
English
and held by
86
libraries
worldwide
This paper considers the desirability of the observed tendency of central banks to adjust interest rates only gradually in response to changes in economic conditions. It shows, in the context of a simple model of optimizing privatesector behavior, that such inertial policy can be optimal. The reason is that small but persistent changes in shortterm interest rates in response to shocks allow a larger effect of monetary policy on long rates and hence upon aggregate demand, for a given degree of overall interestrate variability. The paper also considers two ways of achieving the desirable degree of inertia in the equilibrium responses to shocks. One is by assignment of a loss function that penalizes squared interestrate changes (despite the fact that interestrate changes do not affect the true social objective) to a central bank that is then expected to use discretion in the pursuit of the goal. The second is through commitment to an explicit instrument rule, a generalization of the Taylor rule' in which the funds rate is an increasing function of the lagged funds rate, as in estimated Fed reaction functions
Optimal monetary policy in a liquidity trap by Gauti B Eggertsson (
Book
)
21
editions published
between
2003
and
2004
in
English
and held by
80
libraries
worldwide
In previous work (Eggertsson and Woodford, 2003), we characterized the optimal conduct of monetary policy when a real disturbance causes the natural rate of interest to be temporarily negative, so that the zero lower bound on nominal interest rates binds, and showed that commitment to a historydependent policy rule can greatly increase welfare relative to the outcome under a purely forwardlooking inflation target. Here we consider in addition optimal tax policy in response to such a disturbance, to determine the extent to which fiscal policy can help to mitigate the distortions resulting from the zero bound, and to consider whether a historydependent monetary policy commitment continues to be important when fiscal policy is appropriately adjusted. We find that even in a model where complete tax smoothing would be optimal as long as the zero bound never binds, it is optimal to temporarily adjust tax rates in response to a binding zero bound; but when taxes have only a supplyside effect, the optimal policy requires that the tax rate be raised during the "trap", while committing to lower tax rates below their longrun level later. An optimal policy commitment is still historydependent, in general, but the gains from departing from a strict inflation target are modest in the case that fiscal policy responds to the real disturbance in an appropriate way
Doing without money : controlling inflation in a postmonetary world by Michael Woodford (
Book
)
18
editions published
in
1997
in
English and Undetermined
and held by
72
libraries
worldwide
Abstract: This paper shows that it is possible to analyze equilibrium inflation determination without any reference to either money supply or demand, as long as one specifies policy in terms of a Wicksellian' interestrate feedback rule. This approach should be of considerable interest, as central banks now generally agree that conventional monetary aggregates are of little use as targets or even indicators for monetary policy, owing to the instability of money demand relations in economies with welldeveloped financial markets." The paper's central result is an approximation theorem, showing the existence, for a simple monetary model, of a wellbehaved cashless limit' in which the money balances held to" facilitate transactions become negligible. Inflation in the cashless limit is shown to be a function of the gap between the natural rate' of interest, determined by the supply of goods and opportunities for intertemporal substitution, and a timevarying parameter of the interestrate rule indicating the tightness of monetary policy. Inflation can be completely stabilized, in principle, by adjusting the policy parameter so as to track variation in the natural rate. Under such a regime, instability of money demand has little effect upon equilibrium inflation, and need not be monitored by the central bank
The cyclical behavior of prices and costs by Julio Rotemberg (
Book
)
13
editions published
between
1998
and
1999
in
English
and held by
66
libraries
worldwide
Because inputs are scarce, marginal cost should be an increasing function of output. Without changes in this real marginal cost schedule, aggregate output can vary if and only if the markup of price over marginal cost varies. In this review, we discuss the extent to which observed fluctuations in aggregate economic activity depend upon such variations in average markups. We first study whether, empirically, real marginal cost rises in cyclical expansions. Average real labor cost is not very procyclical, but, for reasons such as overhead labor and adjustment costs, marginal labor cost should be more procyclical. Measures of marginal cost based on materials costs and inventories also appear procyclical. We next show that countercyclical markup variation may, depending upon how costs are modeled, account for a substantial fraction of cyclical output movements. We also show that the observed procyclical variations in productivity and profits are consistent with the hypothesis that cyclical variations in output are primarily due to markup variations than to shifts in the real marginal cost schedule. Finally, we survey theories of endogenous markup variation. These include both models of sticky and models in which firms' desired markup varies over time
Inflation forecasts and monetary policy by Ben Bernanke (
Book
)
12
editions published
in
1997
in
English
and held by
65
libraries
worldwide
Proposals for inflation targeting' as a strategy for monetary policy leave open the important operational question of how to determine whether current policies are consistent with the longrun inflation target. An interesting possibility is that the central bank might target current privatesector forecasts of inflation, either those made explicitly by professional forecasters or those implicit in asset prices. We address the issue of existence and uniqueness of rational expectations equilibria when the central bank uses privatesector forecasts as a guide to policy actions. In a dynamic model which incorporates both sluggish price adjustment and shocks to aggregate demand and aggregate supply, we show that strict targeting of inflation forecasts is typically inconsistent with the existence of rational expectations equilibrium, and that policies approximating strict inflationforecast targeting are likely to have undesirable properties. We also show that economies with more general forecastbased policy rules are particularly susceptible to indeterminacy of rational expectations equilibria. We conclude that, although privatesector forecasts may contain information useful to the central bank, ultimately the monetary authorities must rely on an explicit structural model of the economy to guide their policy decisions
Imperfect competition and the effects of energy price increases on economic activity by Julio Rotemberg (
Book
)
13
editions published
between
1992
and
1996
in
English
and held by
63
libraries
worldwide
We show that modifying the standard neoclassical growth model by assuming that competition is imperfect makes it easier to explain the size of the declines in output and real wages that follow increases in the price of oil. Plausibly parameterized models of this type are able to mimic the response of output and real wages in the United States. The responses are particularly consistent with a model of implicit collusion where markups depend positively on the ratio of the expected present value of future profits to the current level of output
Is the business cycle a necessary consequence of stochastic growth? by Julio Rotemberg (
Book
)
13
editions published
in
1994
in
English
and held by
62
libraries
worldwide
We compute the forecastable changes in output, consumption, and hours implied by a VAR that includes the growth rate of private value added, the share of output that is consumed, and the detrended level of private hours. We show that the size of the forecastable changes in output greatly exceeds that predicted by a standard stochastic growth model, of the kind studied by real business cycle theorists. Contrary to the model's implications, forecastable movements in labor productivity are small and only weakly related to forecasted changes in output. Also, forecasted movements in investment and hours are positively correlated with forecasted movements in output. Finally, and again in contrast to what the growth model implies, forecasted output movements are positively related to the current level of the consumption share and negatively related to the level of hours. We also show that these contrasts between the model and the observations are robust to allowance for measurement error and a variety of other types of transitory disturbances
Loan commitments and optimal monetary policy by Michael Woodford (
Book
)
12
editions published
in
1996
in
English
and held by
62
libraries
worldwide
With loan commitments negotiated in advance, the use of tight money to restrain nominal spending has asymmetric effects upon different categories of borrowers. This can reduce efficiency, even though aggregate demand is stabilized. This is illustrated in the context of an equilibrium model of financial intermediation with loan commitments, where monetary policy is characterized by a supply curve for reserves on the part of the central bank in an interbank market. If demand uncertainty relates primarily to the intensity of demand by each borrower with no difference in the degree of cyclicality of individual borrowers' demands, an inelastic supply of reserves by the central bank is optimal, because it stabilizes aggregate demand and as a result increases average capacity utilization. But if demand uncertainty relates primarily to the number of borrowers rather than to each one's demand for credit, an interestrate smoothing policy is optimal, because it eliminates inefficient rationing of credit in highdemand states
Implementing optimal policy through inflationforecast targeting by Lars E. O Svensson (
Book
)
17
editions published
between
2003
and
2004
in
English
and held by
57
libraries
worldwide
Abstract: We examine to what extent variants of inflationforecast targeting can avoid stabilization bias, incorporate historydependence, and achieve determinancy of equilibrium, so as to reproduce a socially optimal equilibrium. We also evaluate these variants in terms of the transparency of the connection with the ultimate policy goals and the robustness to model perturbations. A suitably designed inflationforecast targeting rule can achieve the social optimum and at the same time have a more transparent connection to policy goals and be more robust than competing instrument rules
Optimal monetary and fiscal policy : a linearquadratic approach by Pierpaolo Benigno (
Book
)
19
editions published
between
2003
and
2005
in
English
and held by
54
libraries
worldwide
We propose an integrated treatment of the problems of optimal monetary and fiscal policy, for an economy in which prices are sticky and the only available sources of government revenue are distorting taxes. Our linearquadratic approach allows us to nest both conventional analyses of optimal monetary stabilization policy and analyses of optimal taxsmoothing as special cases of our more general framework. We show how a linearquadratic policy problem can be derived which yields a correct linear approximation to the optimal policy rules from the point of view of the maximization of expected discounted utility in a dynamic stochastic generalequilibrium model. Finally, we derive targeting rules through which the monetary and fiscal authorities may implement the optimal equilibrium
Optimal stabilization policy when wages and prices are sticky : the case of a distorted steady state by Pierpaolo Benigno (
Book
)
16
editions published
in
2004
in
English
and held by
51
libraries
worldwide
Erceg et al. (2000) show that when both wages and prices are sticky, maximization of expected utility is equivalent to minimizing a loss function with three terms, involving measures of the variability of wage inflation, price inflation and the output gap respectively. Here we generalize their analysis, most importantly by not assuming the existence of output and employment subsidies that eliminate the distortions resulting from market power in goods and labor markets, so that the equilibrium level of output under flexible wages and prices would not necessarily be optimal. We show that a quadratic loss function can still be justified that involves the same three terms, albeit with different relative weights and a different definition of the output gap. Many conclusions of Erceg et al. are thus found to apply more generally. However, we argue that in the presence of significant steadystate distortions, simple rules of the kind that they examine are likely to approximate optimal policy less closely than is suggested by their numerical results
Optimal taxation in an RBC model : a linearquadratic approach by Pierpaolo Benigno (
Book
)
15
editions published
between
2004
and
2005
in
English
and held by
50
libraries
worldwide
"We reconsider the optimal taxation of income from labor and capital in the stochastic growth model analyzed by Chari et al. (1994, 1995), but using a linearquadratic (LQ) approximation to derive a loglinear approximation to the optimal policy rules. The example illustrates how inaccurate "naive" LQ approximation  in which the quadratic objective is obtained from a simple Taylor expansion of the utility function of the representative householdcan be, but also shows how a correct LQ approximation can be obtained, which will provide a correct local approximation to the optimal policy rules in the case of small enough shocks. We also consider the numerical accuracy of the LQ approximation in the case of shocks of the size assumed in the calibration of Chari et al. We find that the correct LQ approximation yields results that are quite accurate, and similar in most respects to the results obtained by Chari et al. using a more computationally intensive numerical method"National Bureau of Economic Research web site
Handbook of monetary economics by Benjamin M Friedman (
Book
)
24
editions published
between
2010
and
2011
in
English
and held by
32
libraries
worldwide
How have monetary policies matured during the last decade? The recent downturn in economies worldwide have put monetary policies in a new spotlight. In addition to their investigations of new tools, models, and assumptions, they look carefully at recent evidence on subjects as varied as pricesetting, inflation persistence, the private sector's formation of inflation expectations, and the monetary policy transmission mechanism. They also reexamine standard presumptions about the rationality of asset markets and other fundamentals. Stopping short of advocating conclusions about the ideal conduct of policy, the authors focus instead on analytical methods and the changing interactions among the ingredients and properties that inform monetary models. The influences between economic performance and monetary policy regimes can be both grand and muted, and this volume clarifies the present state of this continually evolving relationship. Presents extensive coverage of monetary policy theories with an eye toward questions raised by the recent financial crisis Explores the policies and practices used in formulating and transmitting monetary policies Questions fiscalmonetary connnections and encourages new thinking about the business cycle itself Observes changes in the formulation of monetary policies over the last 25 years
NBER Macroeconomics Annual 2006
(
Book
)
4
editions published
in
2007
in
English
and held by
2
libraries
worldwide
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Alternative Names
Michael Woodford amerikansk ekonom Michael Woodford amerikansk økonom Michael Woodford economist Michael Woodford USamerikanischer Volkswirt Woodford, M. 1955
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