Optimal monetary policy: is price-level targeting the next step?
We examine whether inflation targeting should be regarded as optimal. Targeting inflation implies (undesirably) that price level variance tends to infinity: we produce some evidence from both a representative agent model and a long-used forecasting model that, once an endogenous indexation response is allowed for, price level targeting imposes no extra costs of macro variability, indeed gives significant gains. Copyright (c) Scottish Economic Society 2003.
Year of publication: |
2003
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Authors: | Minford, Patrick ; Peel, David |
Published in: |
Scottish Journal of Political Economy. - Scottish Economic Society - SES. - Vol. 50.2003, 5, p. 650-667
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Publisher: |
Scottish Economic Society - SES |
Saved in:
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