Flamini, A. and Fracasso, A. (2009) Household's Preferences and Monetary Policy Inertia. Working Paper. Department of Economics, University of Sheffield ISSN 1749-8368
Abstract
The estimation of monetary policy rules suggests that the interest rates set by central banks move with a certain inertia. Although a number of hypotheses have been suggested to explain this phenomenon, its ultimate origin is unclear, thus delineating this issue as a modern "puzzle" in monetary economics. We show that household's preferences can play an important role in determining optimal interest rate inertia. Importantly, this can occur even when the central bank has egligible preferences for smoothing the interest rate.
Metadata
Item Type: | Monograph |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | The Sheffield Economics Research Paper (SERP) series offers a forum for the research output of the academic staff and research students of the Department of Economics, University of Sheffield. Papers are reviewed for quality and presentation by a departmental editor. However, the contents and opinions expressed remain the responsibility of the authors. All papers may be downloaded free on the understanding that the contents are preliminary and therefore permission from the author(s) should be sought before they are referenced. |
Keywords: | Optimal monetary policy; interest rate smoothing; household's preferences |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) > Sheffield Economics Research Papers Series |
Depositing User: | Repository Officer |
Date Deposited: | 23 Oct 2009 13:54 |
Last Modified: | 05 Jun 2014 22:46 |
Published Version: | http://www.shef.ac.uk/economics/research/serps/yea... |
Status: | Published |
Publisher: | Department of Economics, University of Sheffield |
Identification Number: | Sheffield Economic Research Paper Series 2009002 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:9989 |