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How should central banks define price stability?

Author

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  • Wynne, Mark A.

    () (Federal Reserve Bank of Dallas)

Abstract

It is now generally accepted that the primary objective of central banks should be the maintenance of price stability. This paper considers the question of how central banks should define price stability. I address three specific questions. First, should central banks target broad or narrow measures of inflation? Second, should central banks target headline or core measure of inflation? And third, should central banks define price stability as prevailing at some positive measured rate of inflation?

Suggested Citation

  • Wynne, Mark A., 2008. "How should central banks define price stability?," Globalization and Monetary Policy Institute Working Paper 08, Federal Reserve Bank of Dallas.
  • Handle: RePEc:fip:feddgw:08
    Note: Published as: Wynne, Mark A. (2009), "How Should Central Banks Define Price Stability?," in Designing Central Banks, eds. David Mayes and Geoffrey Wood (London: Routledge), 107-129.
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    File URL: http://dallasfed.org/assets/documents/institute/wpapers/2008/0008.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Inflation (Finance); Financial stability; Price indexes; Monetary policy;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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