NBER paper on optimal monetary policy
An NBER research paper on optimal monetary policy concludes that, in the presence of price stickiness, policymakers should focus their efforts actions towards low inflation volatility.
Since inflation can positively affect a borrower's net worth, monetary policy optimally balances the incentive to offset the price stickiness distortion with the one of marginally relaxing the borrower's collateral constraint, the authors argue.
Click here to read the NBER Working Paper No. 12470 "Optimal Monetary
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