Inflation inertia and optimal delegation of monetary policy

Keiichi Morimoto ()

Economics Bulletin, 2011, vol. 31, issue 2, 1114-1124

Abstract: This paper analyzes the relationship between the optimal weight on output gap in the central bank's loss function and the degree of inertia in a hybrid version of New Keynesian model with a pure discretionary inflation targeting. I show that under endogenous persistence of inflation dynamics, even in discretionary monetary policy regime, a Rogoff's (1985) conservative central banker does not necessarily improve social welfare.

Keywords: hybrid New Keynesian model; inflation targeting; policy weight (search for similar items in EconPapers)
JEL-codes: E5 (search for similar items in EconPapers)
Date: 2011-04-15
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Related works:
Working Paper: Inflation Inertia and Optimal Delegation of Monetary Policy (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-11-00073

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