Inflation targeting and macroeconomic stability in a Post Keynesian economy
AbstractThis paper examines the compatibility of inflation targeting with an economy that is Post Keynesian in character. We show that in a Post Keynesian environment, policymakers can both set and achieve an inflation target without adverse consequences for the real economy, as long as an appropriate policy mix is chosen. The latitude that policymakers have in making this choice is investigated. One of our key results is that orthodox policy regimes do not provide appropriate policy mixes. Indeed, the more orthodox the policy regime becomes, the less viable is inflation targeting in a Post Keynesian economy.
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Bibliographic InfoArticle provided by M.E. Sharpe, Inc. in its journal Journal of Post Keynesian Economics.
Volume (Year): 30 (2008)
Issue (Month): 3 (April)
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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348
incomes policy; inflation targeting; monetary policy; Post Keynesian economics; stability of equilibrium;
Other versions of this item:
- Gilberto Tadeu Lima & Mark Setterfield, 2007. "Inflation Targeting And Macroeconomic Stability In A Post Keynesian Economy," Anais do XXXV Encontro Nacional de Economia [Proceedings of the 35th Brazilian Economics Meeting] 174, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
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