IDEAS home Printed from https://ideas.repec.org/p/sce/scecf0/201.html
   My bibliography  Save this paper

Monetary Authorities' Forecasts And The Inflation Targeting Monetary Policy

Author

Listed:
  • Vincenzo Valori

    (Universita di Pisa-Firenze)

  • Emilio Barucci

    (University of Pisa-Firenze)

Abstract

Alternative Inflation Target monetary policies have been usually studied under the perfect foresight hypothesis. We consider such monetary policies in a bounded rationality framework. In this case, we can distinguish two different scenarios. It is possible to assume bounded rationality only from the agents' side, or to consider a monetary authority characterized by bounded rationality too. In the latter case two facts become important. At first, agents' expectations with respect to the inflation will contribute to determine the money demand; on the other hand, the Central Bank forecasts about agents' expectations will affect the optimal policy choice, in order to achieve the inflation target. We will study the stability properties of these models in a discrete time dynamic framework, particularly considering this "forecasting the forecasts of others'' scheme, which seems to represent the monetary authority behavior in a very realistic way. We characterize the stability of the Perfect Foresight Equilibrium with respect to the inflation target and to the agents' memory.

Suggested Citation

  • Vincenzo Valori & Emilio Barucci, 2000. "Monetary Authorities' Forecasts And The Inflation Targeting Monetary Policy," Computing in Economics and Finance 2000 201, Society for Computational Economics.
  • Handle: RePEc:sce:scecf0:201
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sce:scecf0:201. 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: (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/sceeeea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.