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Inflation Targeting with NAIRU Uncertainty and Endogenous Policy Credibility Author info | Abstract | Publisher info | Download info | Related research | Statistics Peter Isard
Douglas Laxton
Ann-Charlotte Eliasson
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Stochastic simulations are employed to compare performance of monetary policy rules in linear and nonlinear variants of a small macro model with NAIRU uncertainity under different assumptions about the way inflation expectations are formed. Cases in which policy credibility is ignored or treated as exogenous are distinguished from cases in which credibility and inflation expectations respond endogenuously policy credibility strengthens the case for forward-looking inflation forecast based rules relative to backward-looking Taylor rules.
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Paper provided by International Monetary Fund in its series IMF Working Papers with number
01/7.
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Length: 40 pages
Date of creation: 05 Jan 2001Date of revision:
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Keywords: Inflation targeting ; Monetary policy ; Economic models ; Other versions of this item:
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