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The Qatar Centre for Global Banking & Finance welcomes Professor Paul Levine from the University of Surrey to present this research seminar on 'Mandates and Monetary Rules in a New Keynesian Framework'.
It is now generally accepted that monetary policy should be conducted within a framework of instrument independence based on the principles of commitment, accountability and transparency. By a credible commitment to future policies, central banks are then able to influence expectations that achieve the best trade-offs.
In this virtual seminar, Professor Paul Levine will discuss a general mandate framework developed for delegating monetary policy to an instrument-independent, but goal-dependent central bank to discover whether raising the inflation target above the standard 2% per year to 4% is a feasible welfare-enhancing mandate for central banks to deal very effectively with the ZLB. The mandate consists of four components:
- a welfare objective delegated to the central bank in the form of a simple quadratic a loss function that penalizes deviations from target macroeconomic variables (as a benchmark we also consider the household utility as the objective),
- a form of a Taylor-type nominal interest-rate rule that responds to the same target variables specified in the loss function,
- a zero-lower-bound (ZLB) constraint on the nominal interest rate in the form of a specified unconditional probability of ZLB episodes and
- a long-run (steady-state) inflation target.
About the Speaker
Paul Levine is a Professor in the School of Economics at the University of Surrey. He received a first-class BSc and a PhD, both in Mathematics, from the University of Manchester and an MSc in economics (distinction) at Queen Mary, London. In 1984 he became a senior research officer at the Centre for Economic Forecasting, London Business School and was appointed Professor of Economics at the University of Leicester in 1989. In 1994 he moved to the University of Surrey. He has acted as a consultant and/or visiting researcher at the IMF, the ECB, the central banks of Peru and Nigeria, and the World Bank. His main research activity has policy analysis using empirically-based DSGE and behavioural macroeconomic models, both closed and open economy. More recently he has worked on integrating epidemiology and macroeconomic models. He has published over 100 refereed articles or chapters and 2 books. Refereed articles include publications in the Journal of Economic Theory, The Economic Journal, The European Economic Review and the Journal of Monetary Economics. He is ranked by IDEAS-REPEC in the top 5% in 37/39 categories, including average rank for which he is in the top 2% of the world’s publishing economists.
At this event
Director of the Qatar Centre for Global Banking & Finance
Advisor, Qatar Centre for Global Banking & Finance