This paper argues that the adoption of an inflation target reduces the persistence of inflation.We develop the theoretical literature on inflation persistence by introducing a Taylor rule for monetary policy into a model of persistence and showing that inflation targets reduce inflation...

The bulk of literature on real rigidity attempts to identify sources of real rigidity in market imperfections while assuming that the money supply is exogenously set. This paper shows that monetary policy preferences affect the responsiveness of marginal cost to output and through this channel...

This paper argues that the adoption of an inflation target reduces the persistence of inflation.We develop the theoretical literature on inflation persistence by introducing a Taylor rule for monetary policy into a model of persistence and showing that inflation targets reduce inflation...

This paper argues that the parameters of monetary policy rules affect the persistence of inflation and output. Persistence is lower if monetary policy emphasises the price level or if there is an inflation target. A greater emphasis on output increases persistence. There is a simple New...

This paper argues that the parameters of monetary policy rules affect the persistence of inflation and output. Persistence is lower if monetary policy emphasises the price level or if there is an inflation target. A greater emphasis on output increases persistence. There is a simple New...

We use a simple model to show that there is a positive relationship between monetary policy preferences for output stability, real rigidity and macroeconomic persistence. This result has two non-trivial implications. First it suggests that output stabilization may be a less desirable policy...