Inertial Policy
Guest Lecture
Andrea Tambalotti of the Federal Reserve Bank of New York will guest lecture on Wednesday, November 17th. (He will also present a research paper in the Economics Department seminar Wednesday afternoon.) His talk will concern recent research on optimal inertia in monetary policy, and how this research has influenced Federal Reserve actions — particularly the policy of keeping interest rates low "for a considerable period" in 2003 and 2004, following the (slow) recovery from the 2001 recession.
References
- Michael Woodford, "Optimal Interest Rate Smoothing," Review of Economic Studies, v. 70, n. 4, October 2003, pp. 861–886.
- Michael Woodford, "Pitfalls of Forward-Looking Monetary Policy," American Economic Review Papers and Proceedings, v. 90, n. 2, May 2000, pp. 100–104.
Tambalotti will be discussing the first paper by Woodford (2003) in some detail. The second, much shorter paper, presents some useful background on the topic. For additional perspective, read the following text of a speech by Fed governor Ben Bernanke.
- Ben S. Bernanke, "Gradualism," At an economics luncheon co-sponsored by the Federal Reserve Bank of San Francisco (Seattle Branch) and the University of Washington, May 20, 2004.