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Central banks going long

Reis, Ricardo (2018) Central banks going long. In: Aguirre, , Brunnermeier, and Saravia, , (eds.) Monetary policy and financial stability: transmission mechanisms and policy implications. Central Bank of Chile, Santiago, Chile.

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Abstract

Central banks have sometimes turned their attention to long-term interest rates as a target or as a diagnosis of policy. This paper describes two historical episodes when this happened|the US in 1942-51 and the UK in the 1960s and uses a model of inflation dynamics to evaluate monetary policies that rely on going long. It concludes that these policies for the most part fail to keep in ation under control. A complementary methodological contribution is to re-state the classic problem of monetary policy through interest-rate rules in a continuous-time setting where shocks follow diffusions in order to integrate the endogenous determination of inflation and the term structure of interest rates.

Item Type: Book Section
Official URL: http://www.bcentral.cl/web/central-bank-of-chile/p...
Additional Information: © 2018 The Author
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HJ Public Finance
JEL classification: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level; Inflation; Deflation
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy (Targets, Instruments, and Effects)
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies
Sets: Departments > Economics
Date Deposited: 27 Apr 2018 09:40
Last Modified: 20 Nov 2019 02:37
Funders: Swiss Re
URI: http://eprints.lse.ac.uk/id/eprint/87672

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