What Measure of Inflation Should a Central Bank Target?
نویسندگان
چکیده
منابع مشابه
What Measure of Inflation Should a Central Bank Target?
This paper assumes that a central bank commits itself to maintaining an inflation target and then asks what measure of the inflation rate the central bank should use if it wants to maximize economic stability. The paper first formalizes this problem and examines its microeconomic foundations. It then shows how the weight of a sector in the stability price index depends on the sector’s character...
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In closed or open economy models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating the flexible price equilibrium. We analyze this result in the context of developing economies, where a large proportion of households are credit constrained and the share of food expenditures in total consumption expenditures is high. We develop an open eco...
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Over the past two decades, central banks throughout the world have been moving towards greater transparency about policy decisions, the targets that they seek to achieve through those decisions, and their economic outlook of likely future changes. The Central Bank transparency is likely to be of great importance in increasing the effectiveness of monetary policy and reducing macroeconomic volat...
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Increasing the independence of a central bank from political influence, although ex-ante socially beneficial and initially successful in reducing inflation, would ultimately fail to lower inflation permanently. The smaller anticipated policy distortions implemented by a more independent central bank would induce the fiscal authority to decrease current distortions by increasing the deficit. Ove...
متن کاملInflation Targeting and Central Bank Incentives
This paper studies the incentives a central bank faces in announcing inflation targets when the central bank has private information about the economy and the public is uncertain about the central bank’s preferences. Targeting rules in the absence of announcements reduce the inflationary bias of discretionary policy, but they distort the central bank’s response to private information about the ...
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ژورنال
عنوان ژورنال: Journal of the European Economic Association
سال: 2003
ISSN: 1542-4766,1542-4774
DOI: 10.1162/154247603770383398