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Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets

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  • Lars E. O. Svensson

Abstract

Inflation targeting is shown to imply inflation forecast targeting: the central bank's inflation forecast becomes an explicit intermediate target. Inflation forecast targeting simplifies both implementation and monitoring of monetary policy. The weight on output stabilization determines how quickly the inflation forecast is adjusted towards the inflation target. Money growth or exchange rate targeting is generally inferior to inflation targeting and leads to higher inflation variability. Commitment to commitment to

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5797.

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Date of creation: Oct 1996
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Publication status: published as European Economic Review, Vol. 41 (1997): 1111-1146.
Handle: RePEc:nbr:nberwo:5797

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