The previous literature on the benefits of price level versus inflation targeting has, with some qualifications, established that price level targeting entails lower price level variance at the expense of higher inflation and output variance. This paper investigates the properties of monetary...

In this paper we investigate the properties of monetary regimes that combine price-level and inflation targeting. We look both at an optimal control and at a simple rule characterisation of these regimes. We derive numerical results by modelling the economy as a small-scale open-economy RE model...

This paper reports an investigation of the effects of additive and multiplicative uncertainty upon the stabilisation properties of a simple base money rule for monetary policy. Using a five-equation empirical model of the United Kingdom, it is shown that changes in the extent of additive...

Recently, there has been considerable work on stochastic time-varying coefficient models as vehicles for modelling structural change in the macroeconomy with a focus on the estimation of the unobserved paths of random coefficient processes. The dominant estimation methods, in this context, are...

This paper reports results from a survey by the Bank of England in 1995 to assess the extent of price-stickiness in 654 UK companies. In the year before the survey, firms on average reviewed prices monthly but changed them only twice. Time-dependent pricing was far more prevalent than...

This paper looks at disaggregated price data in the UK to see if there is evidence of downward nominal rigidity: are prices less likely to fall after a downward shock than they are to rise after an upward shock? The test is to see if, as the mean inflation rate falls, the skewness, or the...

Using post-war data on 43 countries, this paper shows that the finding that the trade-off between inflation and output falls as inflation rises is quite robust. The implication is that the real effects of monetary policy might be greater as the economy moves towards price stability. The paper...

First, the authors modify the Barro-Gordon model so that a credibility-stabilization trade-off will remain, even when a performance contract of the type envisaged by Carl Walsh (1995) is imposed on the central bank governor. They do this by modeling a real interest rate bias along with the...

This paper tests for unbiasedness in inflation expectations drawn from a survey of UK employees by Gallup. It focuses on the econometric difficulties presented by having a small sample, there being overlapping forecast horizons and by trying to make inference when the data appear to be...