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Optimal monetary policy in a model with agency costs

Author

Listed:
  • Timothy Fuerst

    (Bowling Green State University)

  • Matthias Paustian

    (Bank of England)

  • Charles Carlstorm

    (Federal Reserve Bank of Cleveland)

Abstract
is the optimal policy. We derive the targeting criterion that implements optimal monetary policy under commitment and show under what conditions the target depends on leads or lags of the risk premium. Finally, the paper demonstrates that the degree of price stickiness and/or the nature of monetary policy alter the endogenous propagation of net worth across time.

Suggested Citation

  • Timothy Fuerst & Matthias Paustian & Charles Carlstorm, 2009. "Optimal monetary policy in a model with agency costs," 2009 Meeting Papers 667, Society for Economic Dynamics.
    • Handle: RePEc:red:sed009:667
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    References listed on IDEAS

    as
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