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How should central banks define price stability?

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  • Mark A. Wynne

Abstract

It is now generally accepted that the primary objective of central banks should be the maintenance of price stability. This paper considers the question of how central banks should define price stability. I address three specific questions. First, should central banks target broad or narrow measures of inflation? Second, should central banks target headline or core measure of inflation? And third, should central banks define price stability as prevailing at some positive measured rate of inflation?

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Bibliographic Info

Paper provided by Federal Reserve Bank of Dallas in its series Globalization and Monetary Policy Institute Working Paper with number 08.

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Date of creation: 2008
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Handle: RePEc:fip:feddgw:08

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Keywords: Inflation (Finance) ; Financial stability ; Price indexes ; Monetary policy;

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