Inflation and Its Variation: An Alternative Explanation

Petra Maria Geraats ()

Macroeconomics from EconWPA

Abstract: This paper introduces a general objective function for monetary policy that abandons certainty equivalence and features 'prudence'. It provides an alternative explanation for the positive relation between the level and variability of inflation, both across countries and over time. In particular, the model predicts that high (low) inflation tends to be more variable (stable) over time.

JEL-codes: E31 E52 E61 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mon
Date: 2000-04-04
Note: 25 pages Adobe.pdf
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http://129.3.20.41/eps/mac/papers/0004/0004001.pdf (application/pdf)

Related works:
Working Paper: Inflation and Its Variation: An Alternative Explanation (2006)
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