Optimal monetary policy: is price-level targeting the next step?
AbstractWe examine whether inflation targeting should be regarded as optimal. Targeting inflation implies (undesirably) that price level variance tends to infinity: we produce some evidence from both a representative agent model and a long-used forecasting model that, once an endogenous indexation response is allowed for, price level targeting imposes no extra costs of macro variability, indeed gives significant gains. Copyright (c) Scottish Economic Society 2003.
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Bibliographic InfoArticle provided by Scottish Economic Society in its journal Scottish Journal of Political Economy.
Volume (Year): 50 (2003)
Issue (Month): 5 (November)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0036-9292
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- Haider Ali & Eatzaz Ahmad, 2014. "Choice of Monetary Policy Instrument under Targeting Regimes in a Simple Stochastic Macro Model," PIDE-Working Papers 2014:102, Pakistan Institute of Development Economics.
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