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In a survey of more than 600 economists, most respondents prefer their central bank to have an explicit inflation target. Roughly half want the central bank to keep its current target. Two thirds of the rest want to raise the target, with a median preferred change of one percentage point. In a...
Persistent link: https://www.econbiz.de/10013190820
This paper examines the usefulness of shadow rates to measure the monetary policy stance by comparing them to the official policy rates and those implied by three types of Taylor rules in both inflation targeting countries (the UK, Canada, Australia and New Zealand) and others that have only...
Persistent link: https://www.econbiz.de/10013285605
After the recent financial crisis of 2007, a connection between monetary policy and financial stability has started to be thoroughly investigated. One of the particular areas of this research field deals with the role of various financial variables in the monetary policy rules. The main purpose...
Persistent link: https://www.econbiz.de/10011576500
conditions. The results support the theory of flexible inflation targeting under discretion for the United Kingdom. For New … the wind. The central banks of Canada, Sweden, and Australia have behaved in line with the theory of flexible inflation …
Persistent link: https://www.econbiz.de/10009739532
This paper studies monetary policy rules in a small open economy with Inflation Targeting, incomplete pass-through and rigid nominal wages. The paper shows that, when nominal wages are fully flexible and pass-through is low to moderate, the monetary authority should target the consumer price...
Persistent link: https://www.econbiz.de/10011523924
This paper considers the performance of average inflation targeting (AIT) policy in a New Keynesian model with adaptive learning agents. Our analysis raises concerns regarding robustness of AIT when agents have imperfect knowledge. In particular, the target steady state can be locally unstable...
Persistent link: https://www.econbiz.de/10012508649
This paper estimates a New Keynesian model with a nonlinearity in the monetary policy rule to capture the practice of inflation targeting with target zones or tolerance bands. Private-sector agents form subjective expectations, update their beliefs over time using a perceived model of the...
Persistent link: https://www.econbiz.de/10015407758
Inflation in advanced economies is low by historical standards but there is no threat of deflation. Slower economic growth is caused by supply-side constraints rather than low inflation. Below-the-target inflation does not damage the reputation of central banks. Thus, central banks should not...
Persistent link: https://www.econbiz.de/10012230450
The rise in inflation in 2021-22 sparked a growing literature and debate over the causes of the surge as well as the near- and medium-term path for inflation. This review offers three key messages. First, the exceptional nature of shocks resulting from the COVID-19 pandemic and geopolitical...
Persistent link: https://www.econbiz.de/10013548788
Persistent link: https://www.econbiz.de/10013261171