Output hysteresis and optimal monetary policy

• 成果类型: Article
• 署名作者: Garga, Vaishali; Singh, Sanjay R.
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Boston; University of California System; University of California Davis
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2020.06.005
• 发表日期: 2021
• 关键词: Output hysteresis; optimal monetary policy; zero lower bound

摘要

We derive a fully quadratic approximation to welfare under endogenous growth and study optimal monetary policy. Away from the ZLB, optimal commitment policy sets interest rates to eliminate output hysteresis. A strict inflation targeting rule implements the optimal policy. At the ZLB, strict inflation targeting is sub-optimal and admits output hysteresis, defined as a permanent loss in potential output. A new policy rule that targets output hysteresis returns the output to the pre-shock trend and approximates the welfare gains under optimal commitment policy. A central bank unable to commit to future policy actions suffers from hysteresis bias: it does not offset past losses in potential output. (C) 2020 Elsevier B.V. All rights reserved.