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Optimal monetary policy under inflation targeting: Is zero the optimal perception of inflation inertia?

Paez-Farrell, Juan 2007. Optimal monetary policy under inflation targeting: Is zero the optimal perception of inflation inertia? [Working Paper]. Cardiff Economics Working Papers, Cardiff: Cardiff University.

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Abstract

Recent research has suggested that in deriving optimal policy under discretion, policymakers should react as if there were no structural inflation persistence in order to improve welfare. This paper considers whether such a strong result extends to an inflation targeting central bank with a more general Phillips curve formulation. The findings indicate that if anything, a central banker that assumes a high degree of inflation inertia is often preferable.

Item Type: Monograph (Working Paper)
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HB Economic Theory
Publisher: Cardiff University
Date of First Compliant Deposit: 30 March 2016
Last Modified: 06 Oct 2015 09:11
URI: http://orca.cf.ac.uk/id/eprint/77767

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