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dc.creatorGómez, Mónica A. 
dc.creatorHairault, Jean-Olivier 
dc.description.abstractOur paper aims at unveiling how much the monetary policy shall deviate from the zero-inflation allocation in an economy with a large informal sector. A first insight is thatinformality amplifies cost-push shocks on inflation. The gap between the natural rateand the first best allocation varies due to both fluctuations in tax distortion and sectoralmisallocation. In both channels, the size of informality is key for the magnitude of thecost-push shock, and with it the cost of business cycles. It happens that the higher thelevel of informality, the larger the business cycle costs are. A second insight is relatedto how the monetary policy should optimally spread these costs in terms of inflationand output gap volatility, and how it depends on the informality size. It is shown thatthe aggregate sacrifice ratio (in terms of a weighted average of the sectoral output gaps)increases with the size of the informal sector. This leads to recommend less inflationstability in an economy with a large informal sector. The last insight is that monetarypolicy should not target one particular sector as there is a sectoral integration condition.Only considerations related to informational issues could lead to recommend to favor theformal output gap in the monetary rule
dc.rightsAtribución-NoComercial-CompartirIgual 2.5 Colombia
dc.sourceinstname:Universidad del Rosario
dc.sourcereponame:Repositorio Institucional EdocUR
dc.subjectPolítica monetaria óptima
dc.subjectMacroeconomía neokeynesiana
dc.subjectDistorsión fiscal
dc.subject.lembEconomía informal
dc.subject.lembPolítica monetaria
dc.titleOptimal Monetary policy with Informality: A Benchmark Framework
dc.subject.keywordOptimal monetary policy
dc.subject.keywordNew-Keynesian macroeconomics
dc.subject.keywordTax distortion
dc.publisher.otherUniversidad del Rosario. Facultad de Economía
dc.type.spaDocumento de conferencia
dc.rights.accesoAbierto (Texto Completo)
dc.contributor.eventThe Economics of Informality Conference 2018

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Atribución-NoComercial-CompartirIgual 2.5 Colombia
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