RT Generic
T1 Deflationary vs. inflationary expectations : a new-Keynesian perspective with heterogeneous agents and monetary believes
A1 Geiger,Felix
A1 Sauter,Oliver
WP 2009/07/29
AB We expand a standard New-Keynesian model by allowing for a special role of money
in the inflation and expectations building process. Motivated by the two-pillar
Phillips curve, we introduce heterogeneous expectations. Thereby a fraction of
agents forms inflation expectations by observing trend money growth. We show
that in the presence of these monetary believers, contractive shocks to the economy produce smoother dynamics for inflation and output. We also find that monetary policy should follow a conventional Taylor rule with contemporaneous inflation and output data, if it is uncertain about the fraction of monetary believers.
K1 Geldpolitik
K1 Inflationstheorie
PP Hohenheim
PB Kommunikations-, Informations- und Medienzentrum der Universität Hohenheim
UL http://opus.uni-hohenheim.de/volltexte/2009/369