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Inflation targeting and optimal control theory

Author

Listed:
  • Veloso, Thiago
  • Meurer, Roberto
  • Da Silva, Sergio

Abstract

We make a case for the usefulness of an optimal control approach for the central banks’ choice of interest rates in inflation target regimes. We illustrate with data from selected developed and emerging countries with longest experience of inflation targeting.

Suggested Citation

  • Veloso, Thiago & Meurer, Roberto & Da Silva, Sergio, 2007. "Inflation targeting and optimal control theory," MPRA Paper 3834, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:3834
    as

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    File URL: https://mpra.ub.uni-muenchen.de/3834/1/MPRA_paper_3834.pdf
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    References listed on IDEAS

    as
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    7. Mr. Chorng-Huey Wong & Mr. Eric V. Clifton & Mr. Gene L. Leon, 2001. "Inflation Targeting and the Unemployment-Inflation Trade-off," IMF Working Papers 2001/166, International Monetary Fund.
    8. Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
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    10. Paul R. Masson & Miguel A. Savastano & Sunil Sharma, 2019. "The Scope for Inflation Targeting in Developing Countries," World Scientific Book Chapters, in: Macroeconomic Modelling and Monetary and Exchange Rate Regimes, chapter 10, pages 331-383, World Scientific Publishing Co. Pte. Ltd..
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    More about this item

    Keywords

    inflation targeting; optimal control theory; Taylor rule; monetary policy;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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