Woodford, Michael 1955
Most widely held works about
Michael Woodford
Most widely held works by
Michael Woodford
The inflationtargeting debate by Ben Bernanke (
file
)
21
editions published
between
2004
and
2007
in
English
and held by
796
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."BOOK JACKET
Handbook of monetary economics by Benjamin M Friedman (
Book
)
17
editions published
between
2005
and
2011
in
English and Spanish
and held by
685
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 abou
NBER macroeconomics annual 2006 by Daron Acemoglu (
file
)
7
editions published
in
2007
in
English
and held by
679
libraries
worldwide
This 21st edition of the NBER Macroeconomics Annual treats many questions at the cutting edge of macroeconomics that are central to current policy debates. The first four papers and discussions focus on such current macroeconomic issues as how structuralvectorautoregressions help identify sources of business cycle fluctuations and the evolution of U.S. macroeconomic policies. The last two papers analyze theoretical developments in optimal taxation policy and equilibrium yield curves.Daron Acemoglu is Charles P. Kindleberger Professor of Applied Economics at MIT. Kenneth Rogoff is Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University. Michael Woodford is John Bates Clark Professor of Political Economy at Columbia University. All three are Research Associates of the National Bureau of Economic Research
Handbook of macroeconomics by Kenneth Joseph Arrow (
Book
)
39
editions published
between
1999
and
2007
in
English
and held by
624
libraries
worldwide
Interest and prices : foundations of a theory of monetary policy by Michael Woodford (
Book
)
13
editions published
between
2003
and
2009
in
English
and held by
570
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 1980s, 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 w
Indicator variables for optimal policy by Lars E. O Svensson (
Book
)
28
editions published
between
2000
and
2001
in
English
and held by
164
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
Inflation stabilization and welfare by Pierpaolo Benigno (
Book
)
19
editions published
between
2000
and
2004
in
English
and held by
135
libraries
worldwide
"This paper considers the appropriate stabilization objectives for monetary policy in a microfounded model with staggered pricesetting. Rotemberg and Woodford (1997) and Woodford (2002) have shown that under certain conditions, a local approximation to the expected utility of the representative household in a model of this kind is related inversely to the expected discounted value of a conventional quadratic loss function, in which each period's loss is a weighted average of squared deviations of inflation and an output gap measure from their optimal values (zero). However, those derivations rely on an assumption of the existence of an output or employment subsidy that offsets the distortion due to the market power of monopolisticallycompetitive pricesetters, so that the steady state under a zeroinflation policy involves an efficient level of output. Here we show how to dispense with this unappealing assumption, so that a valid linearquadratic approximation to the optimal policy problem is possible even when the steady state is distorted to an arbitrary extent (allowing for tax distortions as well as market power), and when, as a consequence, it is necessary to take account of the effects of stabilization policy on the average level of output. We again obtain a welfaretheoretic loss function that involves both inflation and an appropriately defined output gap, though the degree of distortion of the steady state affects both the weights on the two stabilization objectives and the definition of the welfarerelevant output gap. In the light of these results, we reconsider the conditions under which complete price stability is optimal, and find that they are more restrictive in the case of a distorted steady state. We also consider the conditions under which pure randomization of monetary policy can be welfareimproving, and find that this is possible in the case of a sufficiently distorted steady state, though the parameter values required are probably not empirically realistic"National Bureau of Economic Research web site
Optimal monetary policy in a liquidity trap by Gauti B Eggertsson (
Book
)
13
editions published
between
2003
and
2004
in
English
and held by
134
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"National Bureau of Economic Research web site
Optimal monetary policy inertia by Michael Woodford (
Book
)
16
editions published
between
1998
and
1999
in
English
and held by
105
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
Doing without money : controlling inflation in a postmonetary world by Michael Woodford (
Book
)
12
editions published
in
1997
in
English
and held by
88
libraries
worldwide
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
Implementing optimal policy through inflationforecast targeting by Lars E. O Svensson (
Book
)
15
editions published
between
2003
and
2005
in
English and Undetermined
and held by
88
libraries
worldwide
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
The cyclical behavior of prices and costs by Julio Rotemberg (
Book
)
13
editions published
between
1998
and
1999
in
English
and held by
87
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
)
10
editions published
in
1997
in
English
and held by
85
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
Optimal taxation in an RBC model : a linearquadratic approach by Pierpaolo Benigno (
Book
)
12
editions published
between
2004
and
2005
in
English
and held by
84
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
Optimal monetary and fiscal policy : a linearquadratic approach by Pierpaolo Benigno (
Book
)
16
editions published
between
2003
and
2005
in
English and Undetermined
and held by
84
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
Imperfect competition and the effects of energy price increases on economic activity by Julio Rotemberg (
Book
)
11
editions published
between
1992
and
1996
in
English
and held by
83
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
Optimal stabilization policy when wages and prices are sticky : the case of a distorted steady state by Pierpaolo Benigno (
Book
)
12
editions published
in
2004
in
English
and held by
82
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"National Bureau of Economic Research web site
Loan commitments and optimal monetary policy by Michael Woodford (
Book
)
9
editions published
in
1996
in
English
and held by
82
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
Control of the public debt : a requirement for price stability? by Michael Woodford (
Book
)
9
editions published
in
1996
in
English
and held by
81
libraries
worldwide
The paper considers the role of limits upon the permissible growth of public debt, like those stipulated in the Maastricht treaty, in making price stability possible. It is shown that a certain type of fiscal instability, namely variations in the present value of current and future primary government budgets, necessarily results in price level instability, in the sense that there exists no possible monetary policy that results in an equilibrium with stable prices. In the presence of sluggish price adjustment, the fiscal shocks disturb real output and real interest rates as well. On the other hand, shocks of this kind can be eliminated by a Maastrichttype limit on the value of the public debt. In the presence of the debt limit (and under assumptions of frictionless financial markets, etc.), Ricardian equivalence holds, and fiscal shocks have no effects upon real or nominal variables. Furthermore, an appropriate monetary policy rule can ensure price stability even in the face of other kinds of real shocks. Thus the debt limit serves as a precondition for the common central bank in a monetary union to be charged with responsibility for maintaining a stable value for the common currency
Price level determinacy without control of a monetary aggregate by Michael Woodford (
Book
)
8
editions published
in
1995
in
English
and held by
81
libraries
worldwide
It is shown that the price level remains determinate even in the case of two kinds of radical money supply endogeneity  an interest rate peg by the central bank, and a 'free banking' regime  that are commonly supposed to imply loss of control of the price level. Price level determination under such regimes can be understood in terms of a 'fiscal theory of the price level, ' according to which the equilibrium price level is that level that makes the real value of nominally denominated government liabilities equal to the present value of expected future government budget surpluses. The application of the fiscal theory of the price level to exogenousmoney regimes is sketched as well
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Woodford, M. 1955
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