Price level versus inflation targeting under heterogeneous expectations: a laboratory experiment
Cars Hommes () and
Journal of Economic Behavior & Organization, 2021, vol. 182, issue C, 39-82
Since the 2007 crisis, macroeconomists have been interested in monetary policies that could help with stabilizing inflation and output (Honkapohja, 2015). Two ideas gained particular attention: (i) that inflation should be replaced by the nominal price level (PLT) as the target for the central bank; and (ii) that the central bank should provide explicit guidance about its interest rate rule. We conduct a laboratory experiment to test the validity of these two hypotheses.
Keywords: Experimental macroeconomics; Expectations and learning; Monetary policy (search for similar items in EconPapers)
JEL-codes: C92 D83 D84 E52 E62 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:182:y:2021:i:c:p:39-82
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