Inflation and Its Variation: An Alternative Explanation

This paper introduces a general objective function for monetary policy that abandons certainty equivalence and features 'prudence'. It provides an alternative explanation for the positive relation between the level and variability of inflation, both across countries and over time. In particular, the model predicts that high (low) inflation tends to be more variable (stable) over time.

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Year of publication:	1999-07-01
Authors:	Geraats, Petra M.
Institutions:	Institute of Business and Economic Research (IBER), Walter A. Haas School of Business
Subject:	inflation \| monetary policy \| objective functions

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Extent:	application/pdf
Series:	Center for International and Development Economics Research, Working Paper Series.
Type of publication:	Book / Working Paper
Notes:	The text is part of a series Center for International and Development Economics Research
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010538649