The optimal monetary policy must trade off between stabilizing inflation and reducing inefficient unemployment fluctuations induced by unions' monopoly power. In this context the monetary authority uses inflatio
redistributiontime consistencyThis Paper studies the structure and time consistency of optimal monetary policy from a public finance perspective in an economy where agents differ in transaction patterns and asset holdings. I find that heterogeneity breaks the link between lack of government commitment and...
The novelty of our paper is to show that this distinction has important implications for optimal policy as it introduces a motive for redistribution between the two agents that meaningfully interacts with Fisherian deflation dynamics. We illustrate this result analytically by solving for the planner’...
This paper analyzes whether a minimum wage can be an optimal redistribution policy when distorting taxes and lump-sum transfers are also available in a competitive economy. We build a static general equilibrium model with a Ramsey planner making decisions on taxes, transfers, and minimum wage levels...
In: Hong Kong monetary authority Hochman HM, Rodgers JD (1969) Pareto optimal redistribution. Am Econ Rev 59(4):542–557 Google Scholar Jain H, Deb K (2013) An evolutionary many-objective optimization algorithm using reference-point based nondominated sorting approach, part II: Handling ...
One reason why a real redistribution of this kind may no longer apply may be that many of the owners of the public debt may gain instead from theex postredistribution furnished by a pay-as-you-go social security scheme. As we assume only labour income is taxed and as we assign a labour...
Answer to: Explain the Pareto optimal policy. By signing up, you'll get thousands of step-by-step solutions to your homework questions. You can...
The parameter Z measures the extent of ex-post redistribution the Fund is willing to tolerate. Note that, if Z < 0 there are states st with positive probability, where the Fund is making a permanent loss in terms of life-time expected net present value – i.e. in the international ...
Stefania AlbanesiAlbanesi, Stefania, 2007. Redistribution and optimal monetary policy: results and open questions. Rivista Di Politica Economica, 3-47.Albanesi, S., 2007. Redistribution and optimal monetary policy: results and open questions. Rivista di Politica Economica 97, 3-47....
Optimal Monetary and Fiscal PolicyRedistribution and EfficiencyHow should the government policy react to asset liquidity frictions? We develop a tractable Ramsey plan for a heterogeneous firm model with liquidity frictions. The model features incomplete markets for investment opportunities due to resale...