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Inflation-targeting rules: History-dependent or forward-looking?

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  • Leitemo, Kai

Abstract

This note discusses the inflation-targeting strategy if price setting gives rise to a hybrid Phillips curve. The strategy is inverted relative to private sector pricing behavior: if private sector price setting is backward-looking, policy should be forward-looking, and vice versa.

Suggested Citation

  • Leitemo, Kai, 2008. "Inflation-targeting rules: History-dependent or forward-looking?," Economics Letters, Elsevier, vol. 100(2), pages 267-270, August.
    • Handle: RePEc:eee:ecolet:v:100:y:2008:i:2:p:267-270
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    References listed on IDEAS

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    10. repec:zbw:bofrdp:2007_008 is not listed on IDEAS
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    Cited by:

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    2. Maria Demertzis & Nicola Viegi, 2008. "Inflation Targets as Focal Points," International Journal of Central Banking, International Journal of Central Banking, vol. 4(1), pages 55-87, March.
    3. Tae-Seok Jang & Stephen Sacht, 2022. "Macroeconomic dynamics under bounded rationality: on the impact of consumers’ forecast heuristics," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 17(3), pages 849-873, July.
    4. Michał Brzoza-Brzezina & Jacek Kotłowski & Agata Miśkowiec, 2013. "How forward-looking are central banks? Some evidence from their forecasts," Applied Economics Letters, Taylor & Francis Journals, vol. 20(2), pages 142-146, February.
    5. Tae-Seok Jang & Stephen Sacht, 2016. "Animal Spirits and the Business Cycle: Empirical Evidence from Moment Matching," Metroeconomica, Wiley Blackwell, vol. 67(1), pages 76-113, February.
    6. Offick, Sven & Wohltmann, Hans-Werner, 2016. "Volatility effects of news shocks in New Keynesian models with optimal monetary policy," Economics Letters, Elsevier, vol. 147(C), pages 78-82.
    7. Lengnick, Matthias & Wohltmann, Hans-Werner, 2016. "Optimal monetary policy in a new Keynesian model with animal spirits and financial markets," Journal of Economic Dynamics and Control, Elsevier, vol. 64(C), pages 148-165.
    8. Maria Demertzis, 2006. "The Role of Expectations in Monetary Policy," International Finance, Wiley Blackwell, vol. 9(3), pages 393-412, December.
    9. Felix Geiger & Oliver Sauter, 2009. "Deflationary vs. Inflationary Expectations - A New-Keynesian Perspective with Heterogeneous Agents and Monetary Believes," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 312/2009, Department of Economics, University of Hohenheim, Germany.
    10. Lamberte, Mario B., 2002. "Central Banking in the Philippines: Then, Now and the Future," Discussion Papers DP 2002-10, Philippine Institute for Development Studies.
    11. dogru, bulent & marabaoglu, akif, 2011. "Impact of inflatıon gap to nomınal interest rates: case of Turkey," MPRA Paper 40472, University Library of Munich, Germany.
    12. Offick, Sven & Wohltmann, Hans-Werner, 2015. "Volatility effects of news shocks in (B)RE models with optimal monetary policy," Economics Working Papers 2015-07, Christian-Albrechts-University of Kiel, Department of Economics.
    13. Sacht, Stephen, 2014. "Optimal monetary policy responses and welfare analysis within the highfrequency New-Keynesian framework," Economics Working Papers 2014-03, Christian-Albrechts-University of Kiel, Department of Economics.

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