Price stability and monetary policy: A proposal of a non active policy rule
A new type of monetary policy rule designed to achieve both price and output stability has increasingly been recommended during the last business cycle expansion, prior to the 2007 crisis. This type of rule implies "active" reaction functions. Based on the new Keynesian approach to monetary economics, these rules prescribe an active response by the central bank in the face of any shock that shifts prices or output from target, which leads to excessive money creation. Here, a less active type of reaction function is proposed; one in which price stability is the long run target, but permitting prices to respond to changes originating in real disturbances. It is argued that the resulting policy delivers outcomes preferable to currently popular rules.
Volume (Year): 34 (2011)
Issue (Month): 95 (Agosto)
|Contact details of provider:|| Postal: Asociación Cuadernos de Economía Elsevier España, S.L. José Abascal, 45, planta 3ª 28003 Madrid|
When requesting a correction, please mention this item's handle: RePEc:cud:journl:v:34:y:2011:i:95:p:62-72. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Raquel Llorente-Heras)or ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.