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Creator: Chin, Daniel M. and Miller, Preston J. Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 194 Abstract:
In this study we contrast fixed and floating exchange rate regimes in a dynamic general equilibrium model. We find that the fundamental difference in the regimes is in the courses they imply for monetary policies. Because of policy coordination requirements, a tighter monetary policy needed to maintain a fixed exchange rate may necessitate a tightening in budget policy as well. We show that under some initial conditions voters or a social planner will favor one regime, but under other conditions they will favor the other. However, the choices of voters and a social planner are almost diametrically opposed.
Palabra clave: Monetary policy, Dynamic general equilibrium, and Exchange rate regimes Tema: E50 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General, F41 - Open Economy Macroeconomics, and C60 - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling: General
Creator: Christiano, Lawrence J. and Fisher, Jonas D. M. (Jonas Daniel Maurice), 1965- Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 171 Abstract:
We describe several methods for approximating the solution to a model in which inequality constraints occasionally bind, and we compare their performance. We apply the methods to a particular model economy which satisfies two criteria: It is similar to the type of model used in actual research applications, and it is sufficiently simple that we can compute what we presume is virtually the exact solution. We have two results. First, all the algorithms are reasonably accurate. Second, on the basis of speed, accuracy and convenience of implementation, one algorithm dominates the rest. We show how to implement this algorithm in a general multidimensional setting, and discuss the likelihood that the results based on our example economy generalize.
Palabra clave: Occasionally binding constraints, Chebyshev interpolation, Parameterized expectations, and Collocation Tema: C63 - Computational Techniques; Simulation Modeling, C60 - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling: General, and C68 - Computable General Equilibrium Models