The Science of Monetary Policy: A New Keynesian Perspective

MONETARY POLICY; STABILIZATION; CREDIBILITY.

A crystallographic study of the PbZrO₃-PbTiO₃-BiFeO₃ ternary system.

The purpose of this investigation was to conduct a crystallographic study of the PbZrO₃-PbTiO₃-BiFeO₃ ternary system, where all three components are perovskites. Lead zirconate is antiferroelectric, lead titanate is ferroelectric, and bismuth ferrate is thought to be ferroelectric. X-ray diffraction analysis was employed to determine the crystallographic structure and lattice parameters. A tetragonal region was found to exist in the area of high PbTiO₃ content. A rhombohedral region occurred in the remainder of the system with high BiFeO₃ and PbZrO₃ content, except for an orthorhombic envelope along the PbZrO₃-BiFeO₃ side of the diagram up to approximately 70 per cent BiFeO₃.The phase boundaries in the system had a phase width, rather than being distinct lines. The addition of PbZrO₃ to the binary PbTiO₃-BiFeO₃ suppresses the normally increasing c/a ratio which occurs as the BiFeO₃ content is increased. At 50 PbZrO₃:5O PbTiO₃, the addition of BiFeO₃ decreases this ratio. The orthorhombic region near the PbTiO₃-BiFeO₃ binary was indexed using a multiple-cell orthorhombic structure. All three lattice parameters decreased with additions of BiFeO₃. High resolution conditions on the diffractometer were required to determine the peak splitting on most of the rhombohedral x-ray patterns. The rhombohedral distortion increased and the a parameter decreased with increasing BiFeO₃ content. The dielectric constant and Curie point were determined for various ratios of BiFeO₃ and 50 PbZrO₃ :50 PbTiO₃. The Curie point was found to be 380 and 400°C for 20 and 30 per cent BiFeO₃, respectively. For 20 per cent BiFeO₃, a dielectric constant of 685 was ascertained. The present study finds significantly higher electrical properties than those reported previously --Abstract, pages ii-iii

Monetary Policy Rules and Macroeconomic Stability: Evidence and some Theory

We estimate a forward-looking monetary policy reaction function for the postwar U.S. economy, pre- and post-October 1979. Our results point to substantial differences in the estimated rule across periods. In particular, interest rate policy in the Volcker-Greenspan period appears to have been much mors sensitive to changes in expected inflation than in the pre-Volcker period.BUSINESS CYCLES ; MONETARY POLICY

A structural investigation of third-currency shocks to bilateral exchange rates

An exchange rate between two currencies can be materially affected by shocks emerging from a third country. A US demand shock, for example, can affect the exchange rate between the euro and the yen. Since positive US demand shocks have a greater positive impact on Japanese interest rates than on eurozone rates, the yen appreciates against the euro in response. Using quarterly data on the U.S., the euro area and Japan from 1981 to 2006, this paper shows that the third-currency effects are significant even when exchange rates evolve according to uncovered interest parity. This is because interest rates are typically set in response to output and inflation, which are in turn influenced by other exchange rates. More importantly, third-currency effects are also transmitted to the actual exchange rate through the expected future exchange rate which is, in a multi-country setup, influenced by third-countries' fundamentals and shocks. Third-currency effects have a stronger impact on the currency of a relatively more open economy. The analysis implies that small open economies should avoid strict forms of bilateral exchange rate targeting, since higher trade and financial openness work as a force intrinsically amplifying currency fluctuations

Money in monetary policy design: monetary cross-checking in the New-Keynesian model

In the New-Keynesian model, optimal interest rate policy under uncertainty is formulated without reference to monetary aggregates as long as certain standard assumptions on the distributions of unobservables are satisfied. The model has been criticized for failing to explain common trends in money growth and inflation, and that therefore money should be used as a cross-check in policy formulation (see Lucas (2007)). We show that the New-Keynesian model can explain such trends if one allows for the possibility of persistent central bank misperceptions. Such misperceptions motivate the search for policies that include additional robustness checks. In earlier work, we proposed an interest rate rule that is near-optimal in normal times but includes a cross-check with monetary information. In case of unusual monetary trends, interest rates are adjusted. In this paper, we show in detail how to derive the appropriate magnitude of the interest rate adjustment following a significant cross-check with monetary information, when the New-Keynesian model is the central bank’s preferred model. The cross-check is shown to be effective in offsetting persistent deviations of inflation due to central bank misperceptions. Keywords: Monetary Policy, New-Keynesian Model, Money, Quantity Theory, European Central Bank, Policy Under Uncertaint

Optimal simple rules and the lower bound on the nominal interest rate in the Christiano–Eichenbaum–Evans model of the US business cycle

Schmitt-Grohé and Uribe (NBER wp 10724, 2004b) analyzes the optimal, simple and implementable monetary policy rules in a medium-scale macromodel, as the one proposed by Christiano et al. (J Polit Econ 113:1–45, 2005). In doing so, they use a sensible, but somewhat arbitrary constraint to account for the lower bound condition on the nominal interest rate. In this work, we check the robustness of their main results to such a criteria. We find that the optimal policies are actually absolutely robust to the easing of this criterion for all the diff erent cases considered.info:eu-repo/semantics/publishedVersio