When Sweden left the gold standard on September 27, 1931, the Swedish government declared that the aim of monetary policy should be to stabilize the domestic purchasing power of the Swedish currency, the krona. With this step, price level targeting officially became for the first time the goal...

Inflation targeting is currently popular with central banks. Is this popularity justified? I investigate this question by comparing a speed limit policy and inflation targeting with a Lucas-type Phillips curve capturing output gap persistence. If the output gap is at least moderately persistent,...

Nominal GDP level targeting (NGDPLT) has become an increasingly popular monetary policy framework over the past decade. This rising popularity has led to increased interest in, as well as some confusion over, how this framework actually works. This paper attempts to address this interest by...

This paper examines the effectiveness of forward guidance in an estimated New Keynesian model with imperfect central bank credibility. Forward guidance and the credibility of the central bank are uniquely modeled by utilizing a game-theoretic evolutionary framework. We estimate credibility for...

This paper examines the effectiveness of forward guidance in an estimated New Keynesian model with imperfect central bank credibility. Forward guidance and the credibility of the central bank are uniquely modeled by utilizing a game-theoretic evolutionary framework. We estimate credibility for...

This paper assesses the value of delegating price level targets to a discretionary central bank in an economy with nominal frictions in both labor and product markets. In contrast to recent studies that demonstrate the benefits of targeting the price of output, model simulations provide evidence...

In this paper we derive optimal monetary targeting rules under various assumptions about fiscal behavior. In contrast to the existing literature we use a linear-quadratic approach and allow for dynamic games between the two policy authorities. It is shown that optimal monetary behavior is...

We evaluate the policy of flexible inflation targeting implemented by the Norges Bank since March 2001. We discuss the reasons why the real interest rates are significantly higher in Norway than in the rest of Europe. Finally we propose some institutional changes that can improve the policy...

Building on recent work in monetary theory and finance, we develop a framework where money serves a double liquidity role, namely, it serves as a medium of exchange in goods markets as well as asset markets. We argue that studying such a framework is not only more empirically relevant, but also...

We compare optimal and simple interest-rate rules. Our model features optimizing agents, monopolistic competition in both product and labor markets, and one-period nominal contracts (for wages alone or for both wages and prices) signed before shocks are known. Exact solutions insure that we...