The Optimal Perception of Inflation Persistence is Zero
This study shows that, in an economy with inflation persistence, it is always welfare improving for a central bank that operates under discretion to behave as if there were no inflation persistence. Under reasonable assumptions about inflation persistence, all of the inefficiency associated with discretionary policymaking is then removed. Copyright The editors of the "Scandinavian Journal of Economics" 2007 .
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Volume (Year): 109 (2007)
Issue (Month): 1 (03)
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