Inflation-targeting, price-path targeting and indeterminacy

In this paper, we examine the areas of indeterminacy in a flexible price RBC model with shopping time role for money and a central bank that uses an interest rate rule to target inflation and/or the price level. We present analytical results showing that, although inflation targeting often results in real indeterminacy, a price level target generally delivers a unique equilibrium for a relevant range of policy parameters.

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Year of publication:	2004
Authors:	Dittmar, Robert ; Gavin, William T.
Institutions:	Federal Reserve Bank of St. Louis
Subject:	Monetary policy \| Equilibrium (Economics)

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Extent:	application/pdf
Series:	Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Published in Economics Letters, September 2005, 88(3), pp. 336-42 Number 2004-007
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005490959