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. Inflation targets may on average be exceeded, and they may have imperfect credibility, but they may usefully reduce inflation …
Persistent link: https://www.econbiz.de/10013229046
In recent years a number of industrialized countries have adopted a strategy for monetary policy known as `inflation targeting.' We describe how this approach has been implemented in practice and argue that it is best understood as a broad framework for policy, which allows the central bank...
Persistent link: https://www.econbiz.de/10013216857
Inflation targeting is a monetary policy rule that has implications for both the average performance of an economy and its business cycle behavior. We use a modern, rational expectations model to study the twin effects of this policy rule. The model highlights forward- looking consumption and...
Persistent link: https://www.econbiz.de/10013218907
price stability. The benefits of credibility (private inflation expectations coinciding with the inflation target) are … discussed. Credibility improves the tradeoff between inflation variability, output-gap variability and instrument variability …
Persistent link: https://www.econbiz.de/10013219290
credibility EBRS is associated with overheating and current account deficits, IRRs give rise to somewhat opposite results … costs infringed by imperfect credibility …
Persistent link: https://www.econbiz.de/10012760044
Although its primary ultimate objective is price stability, the Bundesbank has drawn a distinction between its money-focus strategy and the inflation targeting approach recently adopted by a number of central banks. We show that, holding constant the current forecast of inflation, German...
Persistent link: https://www.econbiz.de/10013235611
In recent years, a number of central banks have announced numerical inflation targets as the basis for their monetary strategies. After outlining the reasons why such strategies might be adopted in the pursuit of price stability, this study examines the adoption, operational design, and...
Persistent link: https://www.econbiz.de/10013236693
This paper begins with a description of the inflation targeting arrangements currently in place in the four above-mentioned countries and their performance records through mid-1995 are reviewed. It is argued, however, that too little time has passed for conclusions to be drawn, so that tentative...
Persistent link: https://www.econbiz.de/10013210677
Inflation targeting is shown to imply inflation forecast targeting: the central bank's inflation forecast becomes an explicit intermediate target. Inflation forecast targeting simplifies both implementation and monitoring of monetary policy. The weight on output stabilization determines how...
Persistent link: https://www.econbiz.de/10013125561
Previous analysis of the implementation of inflation targeting is extended to monetary policy responses to different shocks, consequences of model uncertainty, effects of interest rate smoothing and stabilization, a comparison with nominal GDP targeting, and implications of forward-looking...
Persistent link: https://www.econbiz.de/10013232903