Working Paper
Inflation-targeting, price-path targeting and indeterminacy
Abstract: In this paper, we examine the areas of indeterminacy in a flexible price RBC model with shopping time role for money and a central bank that uses an interest rate rule to target inflation and/or the price level. We present analytical results showing that, although inflation targeting often results in real indeterminacy, a price level target generally delivers a unique equilibrium for a relevant range of policy parameters.
https://doi.org/10.20955/wp.2004.007
Status: Published in Economics Letters, September 2005, 88(3), pp. 336-42
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Provider: Federal Reserve Bank of St. Louis
Part of Series: Working Papers
Publication Date: 2004
Number: 2004-007