Inflation targeting : a framework for communication

dc.contributor.authorDemertzis, Maria
dc.contributor.authorViegi, Nicola
dc.date.accessioned2010-11-18T06:07:47Z
dc.date.available2010-11-18T06:07:47Z
dc.date.issued2009-12
dc.description.abstractWe analyze how the provision of an explicit numerical inflation target provides a focal point for agents’ expectations when information is imperfect. Communicating a target and a tolerance band around it provides a clear framework with which to evaluate monetary policy outcomes. We show how inflation targeting exploits the self-reinforcing loop between success and credibility to help the Central Bank endure large and long lasting shocks. Last, we derive the optimal band width around the target, which exploits the benefits of providing a focal point while maximizing the probability of success.en
dc.identifier.citationMaria Demertzis and Nicola Viegi (2009) “Inflation Targeting: A Framework for Communication,” The B.E. Journal of Macroeconomics: Vol. 9: Iss. 1 (Topics), Article 44. Available at: http://www.bepress.com/bejm/vol9/iss1/art44en
dc.identifier.issn1935-1690
dc.identifier.other10.2202/1935-1690.1992
dc.identifier.urihttp://hdl.handle.net/2263/15296
dc.language.isoenen_US
dc.publisherBerkeley Electronic Pressen_US
dc.rights©1999-2010 The Berkeley Electronic Pressen_US
dc.subjectFocal pointsen
dc.subjectCredibilityen
dc.subjectOptimal band-widthen
dc.subject.lcshMonetary policyen
dc.subject.lcshInflation targetingen
dc.titleInflation targeting : a framework for communicationen
dc.typeArticleen

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