Format:
1 Online-Ressource (circa 63 Seiten)
,
Illustrationen
ISBN:
9781475542639
Series Statement:
IMF working paper WP/16, 70
Content:
We introduce subsistence requirements in food consumption into a simple new-Keynesian model with flexible food and sticky non-food prices. We study how the endogenous structural transformation that results from subsistence affects the dynamics of the economy, the design of monetary policy, and the properties of inflation at different levels of development. A calibrated version of the model encompasses both rich and poor countries and broadly replicates the properties of inflation across the development spectrum, including the dominant role played by changes in the relative price of food in poor countries. We derive a welfare-based loss function for the monetary authority and show that optimal policy calls for complete (in some cases nearcomplete) stabilization of sticky-price non-food inflation, despite the presence of a foodsubsistence threshold. Subsistence amplifies the welfare losses of policy mistakes, however, raising the stakes for monetary policy at earlier stages of development
Additional Edition:
Erscheint auch als Druck-Ausgabe Portillo, Rafael Implications of Food Subsistence for Monetary Policy and Inflation Washington, D.C. : International Monetary Fund, 2016 ISBN 9781475542639
Language:
English
Keywords:
Arbeitspapier
;
Graue Literatur
DOI:
10.5089/9781475542639.001
