A Numerical Analysis of Coordinating Monetary Policy Under New Keynesian Macroeconomics: Can it be Accomplished, How Big are the Effects, and Why?

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Abstract/Contents

Abstract: This paper tests whether or not gains to monetary policy coordination exist in the New Keynesian two country model proposed in Clarida, Gali and Gertler (2002). Major innovations include rigorous numerical analysis that takes advantage of recent techniques proposed by Laffargue (1990) and Klein (2000) and an attention to robustness analysis as advocated by McCallum (1999) by comparing all results to the rational expectations model proposed in Taylor (1980). The major results found are (1) any gains from coordination in Clarida, Gali and Gertler (2002) are not statistically significant, (2) a “simple rule” approach to monetary policy produces policy rules that outperform policy based on discretionary assumptions, regardless of the decision to coordination, and (3) the model in Clarida, Gali and Gertler (2002) can be characterized by a distinct lack of open economy interaction.

Type of resource	text
Date created	May 2008

Author	Pekelis, Leonid
Primary advisor	Taylor, John B.
Degree granting institution	Stanford University, Department of Economics

Subject	Stanford Department of Economics
Subject	monetary policy coordination
Subject	New Keynesian
Subject	open economy
Subject	nominal rigidities
Subject	discretionary policy
Subject	deterministic simulation
Subject	stochastic simulation
Subject	linearized general equilibrium dynamic models
Genre	Thesis

Location	https://purl.stanford.edu/mr959hf6621

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Preferred Citation: Pekelis, Leonid. (2008). A Numerical Analysis of Coordinating Monetary Policy Under New Keynesian Macroeconomics: Can it be Accomplished, How Big are the Effects, and Why?. Stanford Digital Repository. Available at: https://purl.stanford.edu/mr959hf6621

Stanford University, Department of Economics, Honors Theses

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