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UID:c7f4777e6928ddbae65c07efc6617d8e
CATEGORIES:Seminars
CREATED:20230906T060734
SUMMARY:Alan Olivi - University College London
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:\n\nOptimal Monetary Policy during a Cost-of-Living Crisis \n\n\nAbstract:\
 nHow should monetary policy react to aggregate and sectoral disruptions in 
 a world in which consumption baskets and hence inflation rates vary across 
 households? We present a multi-sector New Keynesian with generalized, non-h
 omothetic preferences and realistic heterogeneity in wealth, income, and co
 nsumption of different goods. Despite its richness, the model is computatio
 nally tractable. We highlight two novel wedges emerging in the New Keynesia
 n Phillips Curve, which fluctuate with the distribution of consumption expe
 nditures. We find that these wedges can have profound implications for the 
 joint dynamics of inflation and the output gap, and hence policy trade-offs
 . Moreover, shocks and policy changes are found to have vastly heterogeneou
 s effects on different households. Finally, we show that there is no univer
 sally optimal policy response to distinct sectoral supply shocks, as the ap
 propriate policy reaction  can depend strongly on whether the shock or
 iginates in a luxury or a necessity sector.\n
DTSTAMP:20260606T122337Z
DTSTART:20231106T143000Z
DTEND:20231106T160000Z
SEQUENCE:0
TRANSP:OPAQUE
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