Implications of habit formation for optimal monetary policy

• 成果类型: Article
• 署名作者: Amato, JD; Laubach, T
• 署名单位: Bank for International Settlements (BIS); Federal Reserve System - USA
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2003.05.002
• 发表日期: 2004
• 页码: 305-325
• 关键词: habit formation; optimal monetary policy; Interest rate rules

摘要

We study the implications for optimal monetary policy of introducing habit formation in consumption into a general equilibrium model with sticky prices. Habit formation affects the model's endogenous dynamics through its effects on both aggregate demand and households' supply of output. We show that the objective of monetary policy consistent with welfare maximization includes output stabilization, as well as inflation and output gap stabilization. We find that the variance of output increases under optimal policy, even though it acquires a higher implicit weight in the welfare function. We also find that a simple interest rate rule nearly achieves the welfare-optimal allocation, regardless of the degree of habit formation. In this rule, the optimal responses to inflation and the lagged interest rate are both declining in the size of the habit, although super-inertial policies remain optimal. (C) 2003 Elsevier B.V. All rights reserved.