Policy Rules for Inflation Targeting
1998 (English)Report (Other academic)
Policy rules that are consistent with inflation targeting are examined in a small macroeconomic model of the US economy. We compare the properties and outcomes of explicit "instrument rules" as well as "targeting rules." The latter, which imply implicit instrument rules, may be closer to actual operating procedures of inflation-targeting central banks. We find that inflation forecasts are central for good policy rules under inflation targeting. Some simple instrument and target rules do remarkably well relative to the optimal rule; others, including some that are often used as representing inflation targeting, do less.
Place, publisher, year, edition, pages
Stockholm: IIES , 1998. , 51 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 637
IdentifiersURN: urn:nbn:se:su:diva-41004OAI: oai:DiVA.org:su-41004DiVA: diva2:327707