Inflation Targeting and Price-Level-Path Targeting in the Global Economy Model: Some Open Economy Considerations

Donald Coletti, René Lalonde and Dirk Muir

IMF Staff Papers, 2008, vol. 55, issue 2, 326-338

Abstract: This paper compares the capability of simple inflation targeting (IT) and price-level-path targeting (PLPT) rules to minimize inflation and output gap variability in a two-country, two-sector version of the Global Economy Model calibrated for Canada and the United States. We find that simple PLPT rules are slightly better than simple IT rules at macroeconomic stabilization and that the presence of terms-of-trade shocks tends to bolster the case for PLPT. Lastly, we demonstrate that the choice of monetary policy framework in the United States does not affect the relative merits of IT vs. PLPT in Canada. IMF Staff Papers (2008) 55, 326–338. doi:10.1057/imfsp.2008.2; published online 8 April 2008

Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.palgrave-journals.com/imfsp/journal/v55/n2/pdf/imfsp20082a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/imfsp/journal/v55/n2/full/imfsp20082a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:imfstp:v:55:y:2008:i:2:p:326-338

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41308/PS2

Access Statistics for this article

More articles in IMF Staff Papers from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().