Is there a trade-off between inflation and output stabilization?

Alejandro Justiniano*, Giorgio E. Primiceri, Andrea Tambalotti

*Corresponding author for this work

Research output: Contribution to journalArticle

53 Scopus citations

Abstract

We find that the answer is no in an estimated DSGE model of the US economy in which exogenous movements in workers' market power are not a major driver of observed economic fluctuations. If they are, the tension between the conflicting stabilization objectives of monetary policy increases, but with negligible effects on the equilibrium behavior of the economy under optimal policy.

Original languageEnglish (US)
Pages (from-to)1-31
Number of pages31
JournalAmerican Economic Journal: Macroeconomics
Volume5
Issue number2
DOIs
StatePublished - Apr 1 2013

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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