Targeting Inflation in an Economy with Staggered Price Setting
The present paper inquiries into the nature and workings of an inflation targeting regime using as a reference framework an optimizing monetary business cycle model with staggered price setting. The interest rate rule that keeps inflation constant at its target level (optimal inflation targeting rule) is derived. The properties of two simpler rules - namely, a version of the Taylor rule and a proposed forward looking extension - are analyzed and compared with those of the optimal rule. The implications of the presence of data noise for the performance of those rules are also examined.
Year of publication: |
2001-11
|
---|---|
Authors: | Galí, Jordi |
Institutions: | Banco Central de Chile |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Non-Ricardian Aspects of Fiscal Policy in Chile
Céspedes, Luis Felipe, (2012)
-
Technology Shocks and Aggregate Fluctuations : How Well Does the RBC Model Fit Postwar U.S. Data?
Galí, Jordi, (2004)
-
Understanding the effects of government spending on consumption
Galí, Jordi, (2003)
- More ...