Optimality criteria of hybrid inflation-price level targeting
This paper provides a sensitivity analysis of the relative performance of inflation targeting, price level targeting, and hybrid targeting, the combination of these two. A simple, three-period, steady state to steady state economy is presented, where monetary policy is facing various sets of forward and backward looking expectations, social preferences on inflation and output gap stabilization, and degrees of cost push shock persistence. we derive optimal policy mix under the whole spectrum of these economic conditions, reporting also the criteria of the replicability of the theoretically optimal solution. The main intention of the examination is to reveal the nature of each interrelation between economic and policy parameters. The results show that (i) the relative strength of regimes depends heavily on the preconditions, and that (ii) the relationships of parameters related to the performance are non-linear and occasionally non-monotonic as well. our model specification is somewhat restrictive, however, contrary to the related literature, the examination, even in the intermediate cases, can be conducted analytically.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert J. Gordon, 2006.
"The Boskin Commission Report: A Retrospective One Decade Later,"
NBER Working Papers
12311, National Bureau of Economic Research, Inc.
- Robert J. Gordon, 2006. "The Boskin Commission Report: A Retrospective One Decade Later," International Productivity Monitor, Centre for the Study of Living Standards, vol. 12, pages 7-22, Spring.
- Ippei Fujiwara & Naoko Hara & Naohisa Hirakata & Shinichiro Watanabe & Kentaro Yoshimura, 2005. "Monetary Policy in a Liquidity Trap: What Have We Learned, and to What End?," International Finance, Wiley Blackwell, vol. 8(3), pages 471-508, December.
When requesting a correction, please mention this item's handle: RePEc:mnb:wpaper:2010/8. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lorant Kaszab)
If references are entirely missing, you can add them using this form.