A central bank pursuing the policy of inflation targeting aims to keep inflation as close as possible to a pre …-announced value. But which 'inflation' should this be? Quarterly, annual, biennial? In theoretical models it is typically inflation … during one period. We analyze how changing the period over which the inflation rate is defined - i.e. changing central bank …

inflation - i.e. targeting a j-period average of one-period inflation rates - will cause inflation expectations to change in a … way that improves the short-run trade-off faced by the monetary policymaker. Average inflation targeting is thus an … from the standpoint of the true social objective (inflation targeting under commitment), than the discretionary pursuit of …

This paper studies the transmission of shocks and the trade-offs between stabilizing CPI inflation and alternative … policy, and second, that the trade-off between stabilizing CPI inflation and the output gap strongly depends on which concept …

to alternative policy assumptions and supports that the model may be regarded as structural in a stable low inflation …

can precommit, even in the absence of the traditional "inflation bias." This paper quantifies the welfare differential …-consistent models. From the precommitment and discretionary solutions we calculate the permanent deviation of inflation from target that … in welfare terms is equivalent to moving from discretion to precommitment, the "inflation equivalent." In the estimated …

optimal policy. In particular, when there is uncertainty about the persistence of inflation, it is optimal for the central …