inconsistency problem arising from the temptation to stimulate the economy with unexpected inflation. Although this dynamic … mechanism design problem seems complex, society can implement the optimal policy simply by legislating an inflation cap that … specifies the highest allowable inflation rate. The more severe the time inconsistency problem, the more tightly the cap …

and debt. Mainstream economists have raised issues of excessive inflation, “crowding out” of private sector investment … rates and inflation, not to mention the private sector’s loss of a risk-free, interest-bearing alternative to cash. This is … inflation, exacerbate wealth disparity or have other harmful effects. These are serious problems and they need to be addressed …

inconsistency problem arising from the temptation to stimulate the economy with unexpected inflation. Although this dynamic … mechanism design problem seems complex, society can implement the optimal policy simply by legislating an inflation cap that … specifies the highest allowable inflation rate. The more severe the time inconsistency problem, the more tightly the cap …

A key issue in the renewal of the inflation-control agreement is the question of the appropriate level of the inflation … financial crisis, the effective lower bound (ELB) is more likely to be binding in the future if inflation targets remain at 2 … per cent. This has led some to argue that the inflation target should be raised to reduce the incidence of ELB episodes …

In 1991, Canada became the second country to adopt an inflation target as a central pillar of its monetary policy … performance: (i) the simple, readily understood and consistently applied specification of the inflation target, which, since … agreement between the central bank and government, in which inflation control was recognized as a joint duty of both parties …

inconsistency problem arising from the temptation to stimulate the economy with unexpected inflation. Although this dynamic … mechanism design problem seems complex, society can implement the optimal policy simply by legislating an inflation cap that … specifies the highest allowable inflation rate. The more severe the time inconsistency problem, the more tightly the cap …