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Price stability as monetary objective: the importance of a perfect price index number


  • M.M.G. Fase


This article discusses and advocates extension of the traditional price index to include asset prices. A price index which reflects current asset prices would be of great help to those preparing monetary policy for EMU, and is particularly relevant in the current situation of low inflation as shown up by the traditional price indices. These indices are furthermore presumably subject to upward biasses, so that it has become difficult to pinpoint actual inflation, and hence to formulate monetary policy for EMU. Moreover, it has consequences for the money concept used.

Suggested Citation

  • M.M.G. Fase, 1999. "Price stability as monetary objective: the importance of a perfect price index number," WO Research Memoranda (discontinued) 592, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:wormem:592

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    price index; measurement of inflation.;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation


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