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Price stability as monetary objective: the importance of a perfect price index number

Martin M.G. Fase ()

WO Research Memoranda (discontinued) from Netherlands Central Bank, Research Department

Abstract: This article discusses and advocates extension of the traditional price index to include asset prices. A price index which reflects current asset prices would be of great help to those preparing monetary policy for EMU, and is particularly relevant in the current situation of low inflation as shown up by the traditional price indices. These indices are furthermore presumably subject to upward biasses, so that it has become difficult to pinpoint actual inflation, and hence to formulate monetary policy for EMU. Moreover, it has consequences for the money concept used.

Keywords: price index; measurement of inflation. (search for similar items in EconPapers)
JEL-codes: E52 E31 C43 (search for similar items in EconPapers)
Date: 1999
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