Speed limit policies versus inflation targeting: A free lunch?

Inflation targeting is currently popular with central banks. Is this popularity justified? I investigate this question by comparing a speed limit policy and inflation targeting with a Lucas-type Phillips curve capturing output gap persistence. If the output gap is at least moderately persistent, a speed limit policy can: (1) partly eliminate the statecontingent inflation bias, and (2) reduce inflation variability at no output gap variability cost.

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Year of publication:	2008
Authors:	Hatcher, Michael C.
Publisher:	Cardiff : Cardiff University, Cardiff Business School
Subject:	Geldpolitik \| Inflation Targeting \| Neue klassische Makroökonomik \| inflation targeting \| speed limit policy \| inflation bias \| discretion \| stabilisation

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Series:	Cardiff Economics Working Papers ; E2008/20
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	578250209 [GVK] hdl:10419/65805 [Handle]
Classification:	E50 - Monetary Policy, Central Banking and the Supply of Money and Credit. General ; E52 - Monetary Policy (Targets, Instruments, and Effects) ; E58 - Central Banks and Their Policies
Source:	EconStor

Persistent link: https://www.econbiz.de/10010288833