Michael, Hatcher - Scottish Institute for Research in Economics (SIRE) - 2013
effects of long run inflation risk are assessed under two monetary regimes: inflation targeting (IT) and price-level targeting … (PT). These effects differ because IT implies base-level drift in the price level, while PT makes the price level … stationary around a target price path. Under IT, the welfare cost of long run inflation risk is equal to 0.35 percent of …