What do we really mean by monetary (or price) stability, and financial stability?
Abstractprice stability conflates two ideas: low inflation, and steady inflation. The typical quadratic objective function is unsatisfactory in various ways. Blindness to a mean-amplifying, variance-preserving transformation of inflation rates is one of them, and fixation with the year unit another. Average inflation steadiness over longer periods is valuable, but scores no weight. This paper explores these issues, and others, concerning the links that monetary policy has with both financial stability and fiscal stability.
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Bibliographic InfoPaper provided by Department of Economics, University of Birmingham in its series Discussion Papers with number 07-12.
Length: 15 pages
Date of creation: May 2007
Date of revision:
Find related papers by JEL classification:
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-09-30 (All new papers)
- NEP-CBA-2007-09-30 (Central Banking)
- NEP-MAC-2007-09-30 (Macroeconomics)
- NEP-MON-2007-09-30 (Monetary Economics)
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