Change search
ReferencesLink to record
Permanent link

Direct link
Price Stability as a Target for Monetary Policy: Defining and Maintaining Price Stability
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
1999 (English)Report (Other academic)
Abstract [en]

This paper discusses how price stability can be defined and how price stability can be maintained in practice. Some lessons for the Eurosystem are also considered.

With regard to defining price stability, the choice between price-level stability and low (including zero) inflation and the decisions about the price index, the quantitative target and the role of output stabilization are examined. With regard to maintaining price stability, three main alternatives are considered, namely commitment to a simple instrument rule (like a Taylor rule), forecast targeting (like inflation-forecast targeting) and intermediate targeting (like money-growth targeting). A simple instrument rule does not provide a substitute for a systematic framework for monetary policy deicisions. Such a framework is instead provided by forecast targeting. Forecast targeting can incorporate judgemental adjustments, extra-model information, and different indicators (including indicators of "risks to price stability"). By extending mean forecast targeting to distribution forecast targeting, nonlinearity, nonadditive uncertainty and model uncertainty can be incorporated. Eurosystem arguments in favor of its money-growth indicator and against inflation-forecast targeting are scrutinized and found unconvincing.

Place, publisher, year, edition, pages
Stockholm: IIES , 1999. , 56 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 673
Keyword [en]
inflation targeting, intermediate targeting, monetary targeting, Eurosystem
National Category
URN: urn:nbn:se:su:diva-41101OAI: diva2:328343
Available from: 2010-07-02 Created: 2010-07-02 Last updated: 2010-08-16Bibliographically approved

Open Access in DiVA

fulltext(474 kB)497 downloads
File information
File name FULLTEXT01.pdfFile size 474 kBChecksum SHA-512
Type fulltextMimetype application/pdf

Search in DiVA

By author/editor
Svensson, Lars E.O.
By organisation
Institute for International Economic Studies

Search outside of DiVA

GoogleGoogle Scholar
Total: 497 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

Total: 46 hits
ReferencesLink to record
Permanent link

Direct link