Seminar Papers, Institute for International Economic Studies, Stockholm University
Lars E.O. Svensson
Inflation Targeting: Some Extensions
Abstract: Previous analysis of the implementation of inflation
targeting is extended to monetary policy responses to different shocks,
consequences of model uncertainty, effects of interest rate smoothing and
stabilization, a comparison with nominal GDP targeting, and implications of
forward-looking behavior. Model uncertainty, output stabilization, and
interest rate stabilization or smoothing all call for a more gradual
adjustment of the conditional inflation forecast toward the inflation
target. The conditional inflation forecast is the natural intermediate
target during inflation targeting.
Keywords: inflation targeting; monetary policy; shocks; model uncertainty; interest rate smoothing; conditional inflation forecast; (follow links to similar papers)
JEL-Codes: E42; E52; E58; (follow links to similar papers)
44 pages, October 31, 1997
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