Autore
Canova, Fabio

Titolo
Price smoothing policies: a welfare analysis
Periodico
European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 1992 - Fascicolo: 102 - Pagina iniziale: 1 - Pagina finale: 18

During much of the post WW1I experience U.S. monetary policy has been conducted in such a way as to eliminate seasonal fluctuations in prices and/or nominal cinterest rates. Developments in financial markets and recently discovered empirical regularities regarding the seasonal cycle seem to make these activities questionable. Using a general equilibrium money-in-the-utility function model this paper analyzes the welfare properties of price and interest rate stabilizing policies and examines the sense in which the distinction between seasonal and cyclical fluctuations is relevant for policy purposes. It is shown that price and interest rate smoothing policies are welfare improving, but they are not optimal and that the origin of shocks, not the persistence of the fluctuations, is relevant in formulating policies.



Testo completo: http://hdl.handle.net/1814/401

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