Economics, Econometrics and Finance
4 years ago
Optimal monetary policy boosts long-term growth and maximizes economic prosperity.
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Paper Summary
The researchers built a model to study how monetary policy affects long-term economic growth. They found that the best monetary policy is one where interest rates respond actively to prices and wages, but not as much to output growth. This type of policy maximizes overall economic growth. This suggests that while it's important to focus on long-term growth, stabilizing prices and wages is crucial for a healthy economy.