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Optimal Price Indices for Targeting Inflation Under Incomplete Markets

Anand, Rahul - 2010

In models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating the flexible price equilibrium. In this paper, we develop a two-sector two-good closed economy new Keynesian model to study the optimal choice of price index in markets with...

Persistent link: https://www.econbiz.de/10012462367

On Quality Bias and Inflation Targets

Schmitt-Grohe, Stephanie - 2009

A policy issue central banks are confronted with is whether inflation targets should be adjusted to account for the systematic upward bias in measured inflation due to quality improvements in consumption goods. We show that in the context of a Ramsey equilibrium the answer to this question...

Persistent link: https://www.econbiz.de/10012463144

Inflation targeting and private sector forecasts

Cecchetti, Stephen G. - 2009

In this paper we study the degree to which increased information about monetary policy might lead to individuals coordinating their forecasts. Specifically, we estimate a series of simple models to measure the impact of inflation targeting on the dispersion of private sector forecasts of...

Persistent link: https://www.econbiz.de/10012463225

Evaluating Monetary Policy

Svensson, Lars E.O. - 2009

Evaluating inflation-targeting monetary policy is more complicated than checking whether inflation has been on target, because inflation control is imperfect and flexible inflation targeting means that deviations from target may be deliberate in order to stabilize the real economy. A modified...

Persistent link: https://www.econbiz.de/10012463265

Globalization and Monetary Control

Woodford, Michael - 2007

It has recently become popular to argue that globalization has had or will soon have dramatic consequences for the nature of the monetary transmission mechanism, and it is sometimes suggested that this could threaten the ability of national central banks to control inflation within their...

Persistent link: https://www.econbiz.de/10012465321

Central Bank Communication and Expectations Stabilization

Eusepi, Stefano - 2007

This paper analyzes the value of communication in the implementation of monetary policy. The central bank is uncertain about the current state of the economy. Households and firms are uncertain about the statistical properties of aggregate variables, including nominal interest rates, and must...

Persistent link: https://www.econbiz.de/10012465393

Inflation Band Targeting and Optimal Inflation Contracts

Mishkin, Frederic S. - 2006

In this paper we examine how target ranges work in the context of a Barro-Gordon (1983) type model, in which the time-inconsistency problem stems from political pressures from the government. We show that target ranges turn out to be an excellent way to cope with the time-inconsistency problem,...

Persistent link: https://www.econbiz.de/10012466281

What Measure of Inflation Should a Central Bank Target?

Mankiw, N. Gregory - 2002

This paper assumes that a central bank commits itself to maintaining an inflation target and then asks what measure of the inflation rate the central bank should use if it wants to maximize economic stability. The paper first formalizes this problem and examines its microeconomic foundations. It...

Persistent link: https://www.econbiz.de/10012469328

The Use and Meaning of Words in Central Banking : Inflation Targeting, Credibility, and Transparency

Friedman, Benjamin M. - 2002

Inflation targeting offers the promise of introducing to monetary policy a logic and consistency that some central banks' deliberations sorely missed in the past. At least in today's inherited monetary policymaking context, however, inflation targeting also serves two further objectives that are...

Persistent link: https://www.econbiz.de/10012469742

What Rule for the Federal Reserve? Forecast Targeting

Svensson, Lars E.O. - 2017

forecasts of inflation and employment "look good," in the sense of best fulfilling the dual mandate of price stability and … maximum employment, that is, best stabilize inflation around the inflation target and employment around its maximum level. It … also means publishing the policy-rate path and the forecasts of inflation and employment forecasts and, importantly …

Persistent link: https://www.econbiz.de/10012453711

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