Price-Level Targeting and Stabilization Policy
نویسندگان
چکیده
منابع مشابه
Price Level Targeting and Stabilization Policy
We construct a dynamic stochastic general equilibrium model to study optimal monetary stabilization policy. Prices are fully exible and money is essential for trade. Our main result is that if the central bank pursues a price-level target, it can control ination expectations and improve welfare by stabilizing short-run shocks to the economy. The optimal policy involves smoothing nominal inter...
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This paper investigate the stabilization bias that arises in a model of non-cooperative monetary and fiscal policy stabilisation of the economy, when monetary authority implements price level targeting but fiscal policy remains benevolent. We demonstrate the gain in welfare improvement depends on the level of steady state debt. If the steady state level of the government debt is low, then the m...
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We survey literature comparing ination targeting (IT) and price-level targeting (PT) as macroeconomic stabilisation policies. Our focus is on New Keynesian models and areas that have seen signi cant developments since Amblers (2009) survey: optimal monetary policy; the zero lower bound; nancial frictions; and transition costs of adopting a PT regime. Amblers conclusion that PT improves soci...
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This paper investigates the long-term impact of price-level targeting on social welfare in an overlapping generations model in which the young save for old age by investing in productive capital and indexed and nominal government bonds. A key feature of the model is that the extent of bond indexation is determined endogenously in response to monetary policy as part of an optimal commitment Rams...
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Price level targeting (without base drift) and ination targeting (with base drift) are compared with persistence in output (generated by sticky prices, for instance). Counter to conventional wisdom, price level targeting results in lower short-run ination variability than ination targeting (if output is at least moderately persistent). Price level targeting also eliminates any average inati...
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ژورنال
عنوان ژورنال: Journal of Money, Credit and Banking
سال: 2011
ISSN: 0022-2879
DOI: 10.1111/j.1538-4616.2011.00452.x