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Employment targeting

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  • Bénassy, Jean-Pascal

Abstract

Inflation is often given the central role in discussions of monetary policy. Is this emphasis warranted? We investigate this in a DSGE model and find: (1) One can implement the optimal interest rate policy using only employment as an instrument, (2) using inflation as an instrument would lead to lower utility.

Suggested Citation

  • Bénassy, Jean-Pascal, 2008. "Employment targeting," Economics Letters, Elsevier, vol. 99(2), pages 320-323, May.
    • Handle: RePEc:eee:ecolet:v:99:y:2008:i:2:p:320-323
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    1. Abel, Andrew B., 1987. "Optimal monetary growth," Journal of Monetary Economics, Elsevier, vol. 19(3), pages 437-450, May.
    2. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467-467.
    3. Gray, Jo Anna, 1976. "Wage indexation: A macroeconomic approach," Journal of Monetary Economics, Elsevier, vol. 2(2), pages 221-235, April.
    4. Jean-Pascal Bénassy, 2006. "Interest rate rules, inflation and the Taylor principle: an analytical exploration," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 27(1), pages 143-162, January.
    5. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
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