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Tradeoffs between Inflation and Output-Gap Variances in an Optimizing-Agent Model
Federal Reserve Board.
Federal Reserve Board.
Federal Reserve Board.
1998 (English)Report (Other academic)
Abstract [en]

We demonstrate the existence of a monetary policy tradeoff between price-inflation variability and output-gap variability in an optimizing-agent model with staggered nominal wage and price contracts. This variance tradeoff is absent only in the special case in which prices are sticky and wages are perfectly flexible. When the model is calibrated to exhibit an empirically reasonable degree of nominal wage inertia, strict inflation targeting induces substantial output-gap volatility.

Place, publisher, year, edition, pages
Stockholm: Institute for International Economic Studies, Stockholm University , 1998. , 49 p.
Series
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 650
National Category
Economics
Identifiers
URN: urn:nbn:se:su:diva-41043OAI: oai:DiVA.org:su-41043DiVA: diva2:327983
Available from: 2013-01-25 Created: 2010-07-01 Last updated: 2013-01-25Bibliographically approved

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CiteExportLink to record
Permanent link

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Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
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  • asciidoc
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