Price level targeting (without base drift) and inflation targeting (with base drift) are compared under commitment and … discretion, with persistence in unemployment. Price level targeting is often said to imply more short-run inflation variability … and thereby more employment variability than inflation targeting. Counter to this conventional wisdom, under discretion a …

Price level targeting (without base drift) and inflation targeting (with base drift) are compared under commitment and … discretion, with persistence in unemployment. Price level targeting is often said to imply more short-run inflation variability … and thereby more employment variability than inflation targeting. Counter to this conventional wisdom, under discretion a …

, which involves a commitment to higher future inflation. This commitment mechanism works even though, realistically, the …