Arbeitspapier
Lower for longer under endogenous technology growth
This paper studies monetary policy strategies under endogenous technology dynamics and low r ∗ . Endogenous growth strengthens the gains from make-up strategies relative to inflation targeting, especially if policy space is reduced. This result is due to the long-run non-neutrality of money and the hysteresis effects in TFP through which ELB episodes generate permanent scars on long-run aggregate supply. Make-up strategies not only foster the alignment of inflation with target but also support productivity-improving investment in R&D and technology adoption and hence the long-run trend path, provided that the inherent make-up element is sufficiently pronounced. Inflation is less responsive to monetary policy due to the interaction with productivity dynamics. As a result, additional stimulus is required at the ELB and the degree of subsequent overshooting is alleviated. Endogenous growth also generates novel monetary policy trade-offs, most notably credibility challenges, which can be mitigated by confining make-up elements to ELB episodes.
- ISBN
-
978-952-323-403-1
- Sprache
-
Englisch
- Erschienen in
-
Series: Bank of Finland Research Discussion Papers ; No. 6/2022
- Klassifikation
-
Wirtschaft
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Price Level; Inflation; Deflation
Business Fluctuations; Cycles
Monetary Policy
Innovation; Research and Development; Technological Change; Intellectual Property Rights: General
- Thema
-
Make-up Strategies
ZLB
Endogenous TFP
Hysteresis
Cycle-Trend Interaction
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Elfsbacka Schmöller, Michaela
Spitzer, Martin
- Ereignis
-
Veröffentlichung
- (wer)
-
Bank of Finland
- (wo)
-
Helsinki
- (wann)
-
2022
- Handle
- URN
-
urn:nbn:fi:bof-202203311126
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Elfsbacka Schmöller, Michaela
- Spitzer, Martin
- Bank of Finland
Entstanden
- 2022
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