Inflation targets, credibility, and persistence in a simple sticky-price framework
AbstractThis paper presents a re-formulated version of a canonical sticky-price model that has been extended to account for variations over time in the central bank's inflation target. We derive a closed-form solution for the model, and analyze its properties under various parameter values. The model is used to explore topics relating to the effects of disinflationary monetary policies and inflation persistence. In particular, we employ the model to illustrate and assess the critique that standard sticky-price models generate counterfactual predictions for the effects of monetary policy.
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Bibliographic InfoPaper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2003-43.
Date of creation: 2003
Date of revision:
Other versions of this item:
- Rudd, Jeremy & Whelan, Karl, 2003. "Inflation targets, credibility and persistence in a simple sticky-price framework," Open Access publications from University College Dublin urn:hdl:10197/238, University College Dublin.
- Rudd, Jeremy & Whelan, Karl, 2003. "Inflation Targets, Credibility and Persistence In a Simple Sticky-Price Framework," Research Technical Papers 6/RT/03, Central Bank of Ireland.
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