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Inflation Targeting and Debt: Lessons from Brazil

Favero, Carlo A.; Giavazzi, Francesco - C.E.P.R. Discussion Papers - 2004

A single variable describes, day-by-day, what investors think about the state of Brazil's economy: the Brazilian … markets' assessment of the probability that Brazil might default on its debt obligations. This is mainly because the cost of … domestic interest rates, is thus the necessary first step in order to understand macroeconomic developments in Brazil. The …

Persistent link: https://www.econbiz.de/10005123784

Hyperbolic Discounting and Positive Optimal Inflation

Graham, Liam; Snower, Dennis J. - C.E.P.R. Discussion Papers - 2011

The Friedman rule states that steady-state welfare is maximized when there is deflation at the real rate of interest. Recent work by Khan et al. (2003) uses a richer model but still finds deflation optimal. In an otherwise standard new Keynesian model we show that, if households have hyperbolic...

Persistent link: https://www.econbiz.de/10009643503

Swiss Monetary Policy, 2000-2009

Genberg, Hans; Gerlach, Stefan - C.E.P.R. Discussion Papers - 2010

In January 2000 the Swiss National Bank adopted a new monetary policy framework incorporating a price stability objective defined as (any rate of) CPI inflation below 2 percent. We contrast this framework with inflation targeting strategies and review the SNB’s policy decisions since its...

Persistent link: https://www.econbiz.de/10008468642

A Quantitative Exploration of the Opportunistic Approach to Disinflation

Aksoy, Yunus; Orphanides, Athanasios; Small, David; … - C.E.P.R. Discussion Papers - 2003

This Paper explores the quantitative implications of an approach to monetary policy that gained prominence in the United States during the 1990s. Proponents of this approach recommend that, when inflation is moderate but still above the long-run objective, the central bank should not move...

Persistent link: https://www.econbiz.de/10005123544

Central Bank Independence, Accountability and Transparency: Complements or Strategic Substitutes?

Hughes Hallett, Andrew; Libich, Jan - C.E.P.R. Discussion Papers - 2006

The paper incorporates three institutional design features into a Kydland-Prescott, Barro-Gordon monetary policy game. It shows that goal-independence and goal-transparency (an explicit inflation target) at the central bank are substitute ‘commitment technologies’ that reduce inflation and...

Persistent link: https://www.econbiz.de/10005123596

Price Stability and Monetary Policy Effectiveness when Nominal Interest Rates are Bounded at Zero

Coenen, Günter; Orphanides, Athanasios; Wieland, Volker - C.E.P.R. Discussion Papers - 2003

This Paper employs stochastic simulations of a small structural rational expectations model to investigate the consequences of the zero bound on nominal interest rates. We find that if the economy is subject to stochastic shocks similar in magnitude to those experienced in the US over the 1980s...

Persistent link: https://www.econbiz.de/10005123657

Modelling and Identifying Central Banks' Preferences

Favero, Carlo A.; Rovelli, Riccardo - C.E.P.R. Discussion Papers - 1999

We propose an approach to identify independently the parameters describing the structure of the economy from those describing central bank preferences. We first estimate a parsimonious structural model for US inflation, US output-gap and the world commodity price index. We then proceed to the...

Persistent link: https://www.econbiz.de/10005123701

A Theory of Interest Rate Stepping: Inflation Targeting in a Dynamic Menu Cost Model

Eijffinger, Sylvester C W; Schaling, Eric; Verhagen, Willem - C.E.P.R. Discussion Papers - 1999

A stylised fact of monetary policy making is that central banks do not immediately respond to new information but rather seem to prefer to wait until sufficient 'evidence' to warrant a change has accumulated. However, theoretical models of inflation targeting imply that an optimising central...

Persistent link: https://www.econbiz.de/10005123968

Macroeconomic Stabilization: Fixed Exchange Rates Vs Inflation Targeting Vs Price Level Targeting

Dehejia, Vivek; Rowe, Nicholas - C.E.P.R. Discussion Papers - 2000

We argue that the traditional question 'fixed vs. flexible exchange rates?' is not well-defined, because 'flexible exchange rates' does not explicitly specify any particular monetary policy. In traditional analyses, 'flexible exchange rates' was interpreted as implying a fixed money supply. But...

Persistent link: https://www.econbiz.de/10005124168

Does Inflation Targeting Anchor Long-Run Inflation Expectations? Evidence from Long-Term Bond Yields in the US, UK and Sweden

Gürkaynak, Refet S.; Levin, Andrew; Swanson, Eric T - C.E.P.R. Discussion Papers - 2006

We investigate the extent to which inflation targeting helps anchor long-run inflation expectations by comparing the behaviour of daily bond yield data in the United Kingdom and Sweden—both inflation targeters—to that in the United States, a non-inflation-targeter. Using the difference...

Persistent link: https://www.econbiz.de/10005124214