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Optimal control theory for inflation targeting

  • Sergio Da Silva


    (Department of Economics, Federal University of Santa Catarina)

  • Roberto Meurer


    (Department of Economics, Federal University of Santa Catarina)

  • Thiago Veloso


    (National Agency for Electric Energy)

We make a case for the usefulness of an optimal control approach for the central banks' choice of interest rates in inflation target regimes. We illustrate it with data from selected developed and emerging countries with longest experience of inflation targeting.

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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 3 (2008)
Issue (Month): 24 ()
Pages: 1-14

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Handle: RePEc:ebl:ecbull:eb-08c60001
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  1. Posen, Adam, 1998. "Central Bank Independence and Disinflationary Credibility: A Missing Link?," Oxford Economic Papers, Oxford University Press, vol. 50(3), pages 335-59, July.
  2. Svensson, Lars E.O., 1997. "Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets," Seminar Papers 615, Stockholm University, Institute for International Economic Studies.
  3. Richard Clarida & Jordi Gali & Mark Gertler, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," NBER Working Papers 7147, National Bureau of Economic Research, Inc.
  4. María-Dolores Ramón & Vázquez Jesús, 2006. "How Does the New Keynesian Monetary Model Fit in the U.S. and the Eurozone? An Indirect Inference Approach," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(2), pages 1-51, September.
  5. Chorng-Huey Wong & Eric V. Clifton & H. L. Leon, 2001. "Inflation Targeting and the Unemployment-Inflation Trade-off," IMF Working Papers 01/166, International Monetary Fund.
  6. Frederic S. Mishkin, 2004. "Can Inflation Targeting Work in Emerging Market Countries?," NBER Working Papers 10646, National Bureau of Economic Research, Inc.
  7. Jordi Gali & Mark Gertler, 2000. "Inflation Dynamics: A Structural Econometric Analysis," NBER Working Papers 7551, National Bureau of Economic Research, Inc.
  8. Miguel A. Savastano & Paul R. Masson & Sunil Sharma, 1997. "The Scope for Inflation Targeting in Developing Countries," IMF Working Papers 97/130, International Monetary Fund.
  9. Marcelo Kfoury Muinhos & Sérgio Afonso Lago Alves & Gil Riella, 2002. "Modelo Estrutural com Setor Externo: Endogenização do Prêmio de Risco e do Câmbio," Working Papers Series 42, Central Bank of Brazil, Research Department.
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