Two Types of Discretion : Monetary Policy before 1979 and in the Greenspan Era

廣島大學經濟論叢 Volume 36 Issue 1 Page 93-102 published_at 2012-07-20
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Title ( eng )
Two Types of Discretion : Monetary Policy before 1979 and in the Greenspan Era
Creator
Matsukawa Shigeru
Okamura Kumiko
Source Title
廣島大學經濟論叢
The Hiroshima Economic Review
Volume 36
Issue 1
Start Page 93
End Page 102
Journal Identifire
[ISSN] 0386-2704
[NCID] AN00213519
Abstract
In our neoclassical Phillips curve model, two types of discretionary equilibria can be characterized as a deflationary equilibrium and a high-inflation equilibrium and the absolute value of feedback coefficient on the lagged output gap is larger for the former. This implies that more active policy corresponding to monetary policy during the Greenspan era, brings about deflation rather than high inflation under discretion. This critical aspect contradicts the results obtained in the context of the "rule versus discretion" literature. Furthermore, the discretionary regime in the Greenspan era is unstable, and the equilibrium corresponding to the discretionary regime before 1979, is stable.
NDC
Economics [ 330 ]
Language
eng
Resource Type departmental bulletin paper
Publisher
広島大学経済学会
Date of Issued 2012-07-20
Rights
Copyright (c) 2012 広島大学
Publish Type Version of Record
Access Rights open access
Source Identifier
[ISSN] 0386-2704
[NCID] AN00213519