How Inflation Targeters (Can) Deal with Uncertainty

Katerina Smidkova

Czech Journal of Economics and Finance (Finance a uver), 2005, vol. 55, issue 7-8, 316-332

Abstract: The paper argues that a well-designed methodology for dealing with uncertainty improves the quality of interest-rate decisions taken by inflation targeters. A well-planned methodology is also more easily communicated to the general public, and the subsequent greater transparency makes inflation targeting more efficient. Therefore, it is relevant for an inflation targeter to consult with or consider information from other inflation targeters, researchers, and relevant decision makers when designing or improving upon their methodology. The paper also summarizes the results of a recent survey on methods for dealing with uncertainty for inflation targeters. The results are presented in a framework designed in line with decision analysis. The paper summarizes which methods are commonly used by inflation targeters and what lessons can be learnt from economic research and from decision makers.

Keywords: inflation targeting; uncertainty; decision analysis; robustness analysis (search for similar items in EconPapers)
JEL-codes: E52 E58 E59 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:fau:fauart:v:55:y:2005:i:7-8:p:316-332

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