Monetary Policy in the New Neoclassical Synthesis: A Primer
25 Pages Posted: 5 Dec 2012
Date Written: 2004
Abstract
This primer provides an understanding of the mechanics and objectives of monetary policy using a benchmark new neoclassical synthesis (NNS) macromodel. The NNS model incorporates classical features such as a real business cycle (RBC) core, and Keynesian features such as monopolistically competitive firms and costly price adjustment. Price stability maximizes welfare in the benchmark NNS model because it keeps output at its potential defined as the outcome of an imperfectly competitive RBC model with a constant markup of price over marginal cost.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Can the Central Bank Peg Real Interest Rates? A Survey of Classical and Neoclassical Opinion
-
What is the Monetary Standard, or, How Did the Volcker-Greenspan FOMCs Tame Inflation?
-
Fisherian and Wicksellian Price-Stabilization Models in the History of Monetary Thought
-
Mercantilists and Classicals: Insights from Doctrinal History
-
The Quantity Theory of Money: Its Historical Evolution and Role in Policy Debates
-
After the Accord: Reminiscences on the Birth of the Modern Fed
By Robert L. Hetzel and Ralph Leach