قوانین سیاست پولی بهینه با اصطکاک های بازار کار
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|26357||2008||22 صفحه PDF||سفارش دهید||8988 کلمه|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Economic Dynamics and Control, Volume 32, Issue 5, May 2008, Pages 1600–1621
This paper studies optimal monetary policy rules in a framework with sticky prices, matching frictions and real wage rigidities. Optimal policy is given by a constrained Ramsey plan in which the monetary authority maximizes the agents’ welfare subject to the competitive economy relations and the assumed monetary policy rule. I find that the optimal rule should respond to unemployment alongside with inflation. This is so since models with matching frictions (unlike standard new Keynesian models) feature a congestion externality that makes unemployment inefficiently high. A strong response to inflation remains optimal while a response to output is always welfare detrimental.
Nowadays most central banks follow (or at least so they state) inflation targeting or price stability rules with little weight assigned to output stabilization and almost no attention devoted to other economic indicators such as unemployment. One common argument for such choice is that stabilizing prices optimizes the output-inflation volatility trade-off which implies that inflation stabilization can be achieved with a relatively small output cost. Theoretically this hypothesis is true in models with nominal rigidities and walrasian labor markets. This paper assesses the importance of responding to other real economic variables in a model with sticky prices, non-walrasian labor markets and real wage rigidities. To conduct such an analysis I employ a unitary framework which combines nominal and real rigidities and which has become common in the recent new Keynesian literature. More specifically the model economy is characterized by monopolistic competition, adjustment costs on pricing, matching frictions in the labor market and real wage rigidity.1 The assumption of monopolistic competition and adjustment cost on pricing a’ la Rotemberg (1982) is needed to obtain non-neutral effects of monetary policy and to make a meaningful comparison across different monetary policy rules. Introducing matching frictions a’ la Mortensen and Pissarides (1999) in the labor market allows to consider frictional unemployment in the steady state and provides a rich dynamics for the formation and dissolution of employment relations. The introduction of this congestion externality helps to recover a trade-off between the cost of volatile inflation and the cost of inefficient unemployment fluctuations.2 Such trade-off, absent in standard new Keynesian models, is an essential feature to determine whether optimal monetary policy should deviate from full price stabilization. Finally I introduce real wage rigidity since some authors have shown that this helps to resolve some inconsistencies between the standard matching friction model and the empirical evidence.3 Our economy is characterized by three sources of inefficiency, both in the long and in the short run. The first is monopolistic competition, which induces an inefficiently low level of output thereby calling for mild deviations from strict price stability.4 The second type of distortion stems form the cost of adjusting prices which reduces output thereby calling for closing the ‘inflation gap’. Finally the search theoretic framework is characterized by a congestion externality that tends to tighten the labor market. The chance that workers and firms have to match depends on the number of unemployed people or vacant firms in the market; if either of the two is too high the reduction in the probability of forming a match induces an inefficiently high level of unemployment. Whether there is excessive vacancy creation or an excessive number of searching workers depends on the workers’ bargaining power: when the workers’ share of the matching surplus is too small (hence firms’ share is too high) there will be excessive vacancy creation and viceversa (see Hosios, 1990). Whenever there is a inefficiently low level of employment the monetary authority finds optimal to respond to unemployment fluctuations. The recent optimal monetary policy literature has dealt with the role of distortions in alternative ways. The vast majority of papers neutralize the steady state distortions by specifying a complementary (and arguably unrealistic) role of fiscal policy or by choosing specific parameter spaces. This assures, even in presence of price stickiness, that the average level of output coincides (under zero inflation) with the efficient one, thereby allowing to neglect the role of stochastic uncertainty on the mean level of those variables.5 The approach followed here is based on higher order approximation of all the conditions that characterize the competitive equilibrium of the economy and, as in Kollmann, 2003a and Kollmann, 2003b, Schmitt-Grohe and Uribe, 2004a and Schmitt-Grohe and Uribe, 2004b and Faia and Monacelli (2005) among others, and allows to study policy rules in a dynamic economy that evolves around a distorted steady state. Optimal monetary policy in this context is obtained by solving a constrained Ramsey problem in which the monetary authority maximizes the welfare of agents subject to the constraints represented by the competitive economy relations and the assumed monetary policy rule. 6 I find that a rule responding only to inflation is no longer optimal. In the typical new Keynesian model stabilizing inflation also allows to reach the Pareto efficient frontier. Adao et al. (2003) show that this is true for most households’ preferences and in absence of cyclical variations in the demand–output ratios. In my model the congestion externality induces an inefficiently low level of employment and introduces a distortion both in the long run and along the dynamics. Optimality in this case requires that the policy maker responds to unemployment alongside with inflation. This is so since search externalities generate an unemployment/inflation trade-off which induces the monetary authority to strike a balance between reducing the cost of adjusting prices and increasing an inefficiently low employment. A strong response to inflation remains optimal while responding to output or output gaps (deviations of actual output from potential output) are always welfare detrimental. Finally responding to real wage growth does not enhance welfare; in the present model marginal cost is not equalized to real wages but depends also on the future value of employees (which in turn depends on the evolution of unemployment), hence stabilizing wage growth is not sufficient to stabilize marginal cost and inflation. On the contrary by responding to unemployment the policy maker is able to close the whole marginal cost gap, hence the whole inflation gap. The paper also compares operational rules with the globally optimal Ramsey policy. The main finding of this comparison are as follows. First, the optimal Ramsey plan also features deviations from price stability. Second, the globally optimal Ramsey plan is characterized by higher volatility compared to all other monetary regimes. This is so since under standard operational rules the monetary authority aims solely at stabilizing the economy, while the Ramsey planner has the incentive to take full advantage of the productivity increase so as to amplify and protract the boom phase. The findings in this paper are consistent with those in Cooley and Quadrini (2000). They study unconstrained Ramsey monetary policy in an economy with matching frictions and limited participation in financial market and find that optimal policy implies positive money growth. The paper proceeds as follow. Section 2 presents the model. Section 3 comments on the model dynamics under different rules and in response to shocks. Section 4 analyzes optimal policy and welfare costs of different rules. Section 5 concludes. Figures and tables follow.
نتیجه گیری انگلیسی
This paper derives a constrained Ramsey policy in a model with monopolistic competition and sticky prices, matching frictions and real wage rigidity in the labor market. Furthermore, it compares welfare under different monetary policy rules. It concludes that the introduction of labor market rigidities implies that the optimal rule should feature some response to unemployment. This is so since the introduction of matching frictions adds a congestion externality for which an excessive number of searching workers or vacancies might reduce the probability of forming matches. In those cases unemployment is inefficiently high and the policy maker faces an unemployment/inflation trade-off that calls for responding to unemployment along with inflation. In this paper it is assumed that households are able to insure the unemployment risk. An interesting extension would be to consider the impact of imperfect risk sharing arrangements on the optimal monetary policy. Incomplete risk sharing arrangements would probably increase the cost of unemployment and reinforce the incentive of the policy maker to stabilize labor market variables.