Indexation, Inflation Targeting cum Output Stabilization & Inflation Fluctuations
Jonathan Attey and
Casper de Vries ()
Review of Business and Economic Literature, 2011, vol. 56, issue 4, 394-405
Textbook NK macro models have expected future inflation in the AS and IS schedules. Empirical evidence suggests that lagged inflation has higher relevance for aggregate supply. We derive an AS curve with lagged inflation expectations assuming that wage indexation is the outcome of an uncertain centralized bargaining process European style. Subsequently, we show that the FED-based hybrid objective and ECB inflation objective imply the same interest rate targeting rule. Our AS curve exhibits Brainard type multiplicative uncertainty. It is shown that the popular linearized solution around the deterministic steady state can differ widely from the truly stochastic stationary solution.
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:sen:rebelj:v:56:i:4:y:2011:p:394-405
Access Statistics for this article
Review of Business and Economic Literature is currently edited by Hans Kluwer
More articles in Review of Business and Economic Literature from Intersentia
Bibliographic data for series maintained by Petra Van den Bempt ( this e-mail address is bad, please contact ).