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Inflation variability between central bank's preferences and the structure of the economy: A note

Osama Sweidan ()

Economic Modelling, 2011, vol. 28, issue 1, 630-636

Abstract: The current paper seeks to build a theoretical explanation to understand why many central banks failed to reduce inflation variability despite having the desire. The result proves that central bank's preferences are a necessary condition but not sufficient to guarantee lower inflation variability. The structure of the economy and the types of the shocks are significant factors.

Keywords: Inflation variability; Quadratic loss function; Asymmetric loss function; Central banks (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 E58 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:28:y:2011:i:1:p:630-636

DOI: 10.1016/j.econmod.2010.06.008

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