Inflation and Its Variation: An Alternative Explanation
AbstractThis paper introduces a general objective function for monetary policy that abandons certainty equivalence and features 'prudence'. It provides an alternative explanation for the positive relation between the level and variability of inflation, both across countries and over time. In particular, the model predicts that high (low) inflation tends to be more variable (stable) over time.
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Bibliographic InfoPaper provided by Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley in its series Center for International and Development Economics Research, Working Paper Series with number qt56b2g3vn.
Date of creation: 01 Jul 1999
Date of revision:
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inflation; monetary policy; objective functions;
Other versions of this item:
- Petra M. Geraats, 2000. "Inflation and Its Variation: An Alternative Explanation," Macroeconomics 0004001, EconWPA.
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
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- Geraats, P.M, 2005.
"Transparency of Monetary Policy: Theory and Practice,"
Cambridge Working Papers in Economics
0549, Faculty of Economics, University of Cambridge.
- Petra M. Geraats, 2006. "Transparency of Monetary Policy: Theory and Practice," CESifo Economic Studies, CESifo, vol. 52(1), pages 111-152, March.
- Petra Geraats, 2005. "Transparency of Monetary Policy: Theory and Practice," CESifo Working Paper Series 1597, CESifo Group Munich.
- Paolo Surico, 2008.
"Measuring the Time Inconsistency of US Monetary Policy,"
London School of Economics and Political Science, vol. 75(297), pages 22-38, 02.
- Paolo Surico, 2004. "Measuring the time-inconsistency of US monetary policy," Money Macro and Finance (MMF) Research Group Conference 2003 96, Money Macro and Finance Research Group.
- Surico, Paolo, 2003. "Measuring the time-inconsistency of US monetary policy," Working Paper Series 0291, European Central Bank.
- Paolo Surico, 2004. "Measuring the Time-Inconsistency of US Monetary Policy," Macroeconomics 0401006, EconWPA.
- Tsyplakov, Alexander, 2010. "The links between inﬂation and inﬂation uncertainty at the longer horizon," MPRA Paper 26908, University Library of Munich, Germany.
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