Short and Long Interest Rate Targets

Pedro Teles, Isabel Correia (ihc@ucp.pt) and Bernardino Adao
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Bernardino Adao: Banco de Portugal

No 452, 2012 Meeting Papers from Society for Economic Dynamics

Abstract: A target for the short-term nominal interest rate does not pin down realized inflation. Neither does it pin down the term premia. Short and long rates are threrefore independent monetary policy instruments. A target of the term structure is equivalent to a peg of the returns on state-contingent nominal assets. These are the rates that should be targeted in order to pin down realized inflation.

Date: 2012
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Related works:
Journal Article: Short and long interest rate targets (2014)
Working Paper: Short and Long Interest Rate Targets (2010)
Working Paper: Short and long interest rate targets (2010)
Working Paper: Short and Long Interest Rate Targets (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed012:452

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