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Hybrid Inflation and Price-Level Targeting

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Author Info
Batini, Nicoletta
Yates, Anthony

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Abstract

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 calibrated on UK data. We conclude that: (1) the relative merits of price-level and inflation targeting, as well as of mixes of these two, depend on particular modelling and policy assumptions; and (2) these merits do not always change gradually and/or monotonically as we move from one regime to another.

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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 35 (2003)
Issue (Month): 3 (June)
Pages: 283-300
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Handle: RePEc:mcb:jmoncb:v:35:y:2003:i:3:p:283-300

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Carl Walsh, 2001. "Speed Limit Policies: The Output Gap and Optimal Monetary Policy," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  2. Lavan Mahadeva & Gabriel Sterne, . "The role of short-run inflation targets and forecasts in disinflation," Bank of England working papers 167, Bank of England. [Downloadable!]
  3. Teruyoshi Kobayashi, 2005. "Optimal monetary policy and the role of hybrid inflation-price-level targets," Applied Economics, Taylor and Francis Journals, vol. 37(18), pages 2119-2125, October. [Downloadable!] (restricted)
  4. Bokor, László, 2007. "Optimality criteria of hybrid inflation-price level targeting," MPRA Paper 10206, University Library of Munich, Germany, revised Jul 2008. [Downloadable!]
  5. Michael Woodford, 2007. "How Important is Money in the Conduct of Monetary Policy?," Levine's Working Paper Archive 122247000000001419, David K. Levine. [Downloadable!]
    Other versions:
  6. Jeffrey C. Fuhrer, 2000. "Optimal monetary policy in a model with habit formation," Working Papers 00-5, Federal Reserve Bank of Boston. [Downloadable!]
    Other versions:
  7. Richard Mash, 2003. "New Keynesian Microfoundations Revisited: A Calvo-Taylor-Rule-of-Thumb Model and Optimal Monetary Policy Delegation," Economics Series Working Papers 174, University of Oxford, Department of Economics. [Downloadable!]
  8. Jeffrey C. Fuhrer, 2001. "Optimal monetary policy in a model with habit formation and explicit tax distortions," Working Papers 01-06, Federal Reserve Bank of Boston. [Downloadable!]
  9. Richard Mash, 2002. "New Keynesian Microfundations Revisited: A Generalised Calvo-Taylor Model and the Desirability of Inflation vs. Price Level Targeting," Economics Series Working Papers 109, University of Oxford, Department of Economics. [Downloadable!]
    Other versions:
  10. Eva Ortega & Nooman Rebei, 2006. "The Welfare Implications of Inflation versus Price-Level Targeting in a Two-Sector, Small Open Economy," Working Papers 06-12, Bank of Canada. [Downloadable!]
  11. Tibor Hledik, 2003. "Modelling the Second-Round Effects of Supply-Side Shocks on Inflation," Working Papers 2003/12, Czech National Bank, Research Department. [Downloadable!]
  12. Christopher Allsopp, 2002. "The Future of Macroeconomic Policy in the European Union," Discussion Papers 07, Monetary Policy Committee Unit, Bank of England. [Downloadable!]
  13. Viñals, José, 2001. "Monetary Policy Issues in a Low Inflation Environment," CEPR Discussion Papers 2945, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  14. Lars E.O. Svensson, 2003. "Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others," NBER Working Papers 10195, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Nicoletta Batini & Douglas Laxton, 2006. "Under What Conditions Can Inflation Targeting Be Adopted? The Experience of Emerging Markets," Working Papers Central Bank of Chile 406, Central Bank of Chile. [Downloadable!]
  16. Stephen G. Cecchetti & Junhan Kim, 2003. "Inflation Targeting, Price-Path Targeting and Output Variability," NBER Working Papers 9672, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  17. Alexander Mihailov, 2007. "Does Instrument Independence Matter under the Constrained Discretionof an Inflation Targeting Goal? Lessons from UK Taylor Rule Empirics," Money Macro and Finance (MMF) Research Group Conference 2006 95, Money Macro and Finance Research Group. [Downloadable!]
  18. WenShwo Fang & Stephen M. Miller & Chih-Chuan Yeh, 2007. "Does a Threshold Inflation Rate Exist? Quantile Inferences for Inflation and Its Variability," Working papers 2007-45, University of Connecticut, Department of Economics, revised Jun 2009. [Downloadable!]
    Other versions:
  19. Stephen G. Cecchetti & Stefan Krause, 2006. "Inflation Targeting versus Price-Path Targeting: Looking For Improvements," Working Papers Central Bank of Chile 399, Central Bank of Chile. [Downloadable!]
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