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Hybrid Inflation and Price-Level Targeting

  • Batini, Nicoletta
  • Yates, Anthony

In this paper we investigate the properties of monetary regimes that combine price-level and inflation targeting. We look both at an optimal control and at a simple rule characterisation of these regimes. We derive numerical results by modelling the economy as a small-scale open-economy RE model calibrated on UK data. We conclude that: (1) the relative merits of price-level and inflation targeting, as well as of mixes of these two, depend on particular modelling and policy assumptions; and (2) these merits do not always change gradually and/or monotonically as we move from one regime to another.

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Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 35 (2003)
Issue (Month): 3 (June)
Pages: 283-300

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Handle: RePEc:mcb:jmoncb:v:35:y:2003:i:3:p:283-300
Contact details of provider: Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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