Replication data for: Optimal Monetary Policy with Relative Price Distortions

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Project Citation:

Yun, Tack. Replication data for: Optimal Monetary Policy with Relative Price Distortions. Nashville, TN: American Economic Association [publisher], 2005. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-06. https://doi.org/10.3886/E116044V1

Project Description

Summary: This paper analyzes optimal monetary policy in a sticky price model with Calvo-type staggered price-setting. In the paper, the optimal monetary policy maximizes the expected utility of a representative household without having to rely on a set of linearly approximated equilibrium conditions, given the distortions associated with the staggered price-setting. It shows that the complete stabilization of the price level is optimal in the absence of initial price dispersion, while optimal inflation targets respond to changes in the level of relative price distortion in the presence of initial price dispersion.

Scope of Project

JEL Classification:
E31 Price Level; Inflation; Deflation
E52 Monetary Policy

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Published Versions

V1 [2019-12-06]

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