Price-Level Targeting and Stabilization Policy: A Review

Steven Ambler ()

Discussion Papers from Bank of Canada

Abstract: The author surveys recent articles on the costs and benefits of price-level targeting versus inflation targeting, focusing on the benefits and costs of price-level targeting as a tool for stabilization policy. He reviews papers that examine how price-level targeting affects the short-run trade-off between output and inflation variability by influencing expectations of future inflation. The author looks at the implications of this argument for assigning an objective based on price-level targeting to a central bank that is unable to commit to its future policies. He discusses some recent papers that examine how price-level targeting can help to avoid the zero-bound problem, and papers that examine the incentives created by price-level targeting to change the degree of indexation of private contracts.

Keywords: Monetary; policy; framework (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2007
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (15)

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Journal Article: Price-Level Targeting and Stabilization Policy: A Review (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocadp:07-11

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