G2TT
来源类型Discussion paper
规范类型论文
来源IDDP5698
DP5698 Democracy and Protectionism
Kevin O'Rourke; Alan M. Taylor
发表日期2006-05-30
出版年2006
语种英语
摘要A central tenet of inflation targeting is that establishing and maintaining well-anchored inflation expectations are essential. In this paper, we reexamine the role of key elements of the inflation targeting framework towards this end, in the context of an economy where economic agents have an imperfect understanding of the macroeconomic landscape within which the public forms expectations and policymakers must formulate and implement monetary policy. Using an estimated model of the U.S. economy, we show that monetary policy rules that would perform well under the assumption of rational expectations can perform very poorly when we introduce imperfect knowledge. We then examine the performance of an easily implemented policy rule that incorporates three key characteristics of inflation targeting: transparency, commitment to maintaining price stability, and close monitoring of inflation expectations, and find that all three play an important role in assuring its success. Our analysis suggests that simple difference rules in the spirit of Knut Wicksell excel at tethering inflation expectations to the central bank?s goal and in so doing achieve superior stabilization of inflation and economic activity in an environment of imperfect knowledge.
主题International Macroeconomics
关键词Learning Natural rate of interest Natural rate of unemployment Rational expectations Monetary policy rules Uncertainty Bond prices
URLhttps://cepr.org/publications/dp5698
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/534542
推荐引用方式
GB/T 7714
Kevin O'Rourke,Alan M. Taylor. DP5698 Democracy and Protectionism. 2006.
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