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On the (ir)relevance of direct supply-side effects of monetary policy

Gabriel, V, Levine, P, Spencer, C and Yang, B On the (ir)relevance of direct supply-side effects of monetary policy .

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Abstract

The relevance of direct supply-side effects of monetary policy in a New Keynesian DSGE model is studied. We extend a model with several nominal and real frictions by introducing a cost channel of monetary transmission and allowing for non-separability of money and consumption in the utility of the representative household. These fea- tures have important theoretical consequences for the output-inflation trade-off and indeterminacy of interest rate rules. The empirical evidence for these effects are then examined using a Bayesian maximum likelihood framework complemented with GMM single-equation estimation. Both estimation strategies point to weak evidence for the cost channel and non-separable utility.

Item Type: Other
Authors :
NameEmailORCID
Gabriel, Vv.gabriel@surrey.ac.ukUNSPECIFIED
Levine, Pp.levine@surrey.ac.ukUNSPECIFIED
Spencer, CUNSPECIFIEDUNSPECIFIED
Yang, BUNSPECIFIEDUNSPECIFIED
Uncontrolled Keywords : E42, E52, C11., New Keynesian model, Bayesian maximum likelihood estimation, GMM, non-separable utility, cost channel.
Depositing User : Symplectic Elements
Date Deposited : 16 May 2017 15:14
Last Modified : 17 May 2017 14:33
URI: http://epubs.surrey.ac.uk/id/eprint/818179

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