Inflation persistence and robust monetary policy design

Günter Coenen

No 290, Working Paper Series from European Central Bank

Abstract: This paper investigates the performance of optimised interest rate rules when there is uncertainty about a key determinant of the monetary transmission mechanism, namely the degree of persistence characterising the inflation process. The paper focuses on the euro area and utilises two variants of an estimated small-scale macroeconomic model featuring distinct types of staggered contracts specifications which induce quite different degrees of inflation persistence. The paper shows that a cautious monetary policy-maker is well advised to design and implement interest rate policies under the assumption that inflation persistence is high when uncertainty about the prevailing degree of inflation persistence is pervasive. JEL Classification: E31, E52, E58, E61

Keywords: euro area; inflation; inflation persistence; macroeconomic modelling; monetary policy design; robustness; staggered contracts (search for similar items in EconPapers)
Date: 2003-11
Note: 241047
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (47)

Downloads: (external link)
https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp290.pdf (application/pdf)

Related works:
Journal Article: Inflation persistence and robust monetary policy design (2007)
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:ecb:ecbwps:2003290

Access Statistics for this paper

More papers in Working Paper Series from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().