EconPapers    
Economics at your fingertips  
 

Targeting nominal GDP or prices:: Guidance and expectation dynamics

Kaushik Mitra and Seppo Honkapohja ()

No 4/2014, Research Discussion Papers from Bank of Finland

Abstract: We examine global dynamics under infinite-horizon learning in New Keynesian models where monetary policy practices either price level or nominal GDP targeting and compare these regimes to inflation targeting. These interest-rate rules are subject to the zero lower bound. Robustness of the three rules in learning adjustment are compared using criteria for the domain of attraction of the targeted steady state, volatility of inflation and output and sensitivity to the speed of learning parameter. Performance of price-level and nominal GDP targeting significantly improves if the additional guidance in these regimes is incorporated in private agents' learning. JEL Classification: E63, E52, E58. Keywords: Adaptive Learning, Monetary Policy, Inflation Targeting, Zero Interest Rate Lower Bound

JEL-codes: E63 E52 E58 (search for similar items in EconPapers)
Date: 2014-01-15
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
https://helda.helsinki.fi/bof/bitstream/123456789/7880/1/172913.pdf (application/pdf)

Related works:
Working Paper: Targeting Nominal GDP or Prices: Guidance and Expectation Dynamics (2014) Downloads
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:bof:bofrdp:2014_004

Access Statistics for this paper

More papers in Research Discussion Papers from Bank of Finland Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland. Contact information at EDIRC.
Bibliographic data for series maintained by Minna Nyman ().

 
Page updated 2019-12-09
Handle: RePEc:bof:bofrdp:2014_004