with markedly different long run implications are examined: inflation targeting and price-level targeting. Optimal … relatively high (76 per cent). With price-level targeting, by contrast, long-term inflation uncertainty is minimal because the …

to price-level targeting. The recent financial crisis provided a costly reminder that price stability does not …

proposals are made. It is argued that a hybrid of inflation and price level targeting, combined with a requirement by the macro …

inflation targeting cum exchange rate stabilization and a price-level targeting are more suitable rules in minimizing … financial accelerator mechanism is working, a price-level targeting rule dominates. One caveat is that the source of the shock … plays an important role. Once the financial shock is not operative, the gain from a price-level targeting rule decreases …

prices across sectors, the costs of stabilisation under price-level targeting remain much higher than under inflation …Recent research has shown that optimal monetary policy may display considerable price-level drift. Proponents of price-level … targeting have argued that the costs of eliminating the price-level drift may be reduced if the central bank responds flexibly …

Moving to price-level targeting from inflation-rate targeting could be a sound option for the Bank of Canada after 2011 …