A study of optimal monetary policy under administered prices

Resumo

This paper investigates the monetary policy’s response to productivity shocks and itseffects in the welfare, with the inclusion of a administered goods sector in the economy,which prices are readjusted according to a pre-established rule by the government. Thepaper presents a structural equilibrium model with a sticky-price sector and a administeredprice sector, using the standard DSGE model. The main result of this paper is to showthat, with the endogenization of a different rule for the readjust of some goods’ prices inthe economy, the best response of the monetary authority is not to react in the most rigidway to any deviation of the output from its potential or the inflation from its target. Inaddition, for the practical design of monetary policy, we have identified that the monetaryauthority should adjust the coefficients of the parameters of the Taylor rule, as well as theweight given to the inflation within the rule of readjust of administered prices, given thesize of the administered goods in the consumer bundle.

Ficha do documento

Tipo

Dissertação

Ano

2019

Instituição

Fundação Getulio Vargas

Fonte

Repositório da FGV

Idioma

Inglês

Acesso

Acesso aberto

Identificador

oai:repositorio.fgv.br:10438/27437

Temas

Economia

Palavras-chave

Optimal monetary policyDSGE modelAdministered pricesPolítica monetária ótimaModelo DSGEPreços administradosEconomiaPolítica monetáriaPreçosMacroeconomia - Modelos matemáticos