Does the P* Model provide Any Rationale for Monetary Targeting?

Lars Svensson

No 671, Seminar Papers from Stockholm University, Institute for International Economic Studies

Abstract: The so called P* model is frequently used or referred to in discussions of monetary targeting. This gives the impression that the P* model might provide some rationale for monetary targeting or for the monetary reference value used by the Eurosystem. The P* model implies that inflation is detremined by the level of and changes in the "real money gap" (the deviation of current real balances from their long-run equilibrium level), and hence that the money gap is an important indicator for future inflation. Nevertheless, the P* model does not seem to provide any rationale for either a Bundesbank-style money-growth target or a Eurosystem-style money-growth indicator.

Keywords: Real Balances; Reference value; Inflaion targeting (search for similar items in EconPapers)
JEL-codes: E42 E52 E58 (search for similar items in EconPapers)
Pages: 21 pages
Date: 1999-06-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://su.diva-portal.org/smash/get/diva2:328304/FULLTEXT01 (application/pdf)

Related works:
Journal Article: Does the P* Model Provide Any Rationale for Monetary Targeting? (2000)
Journal Article: Does the P* Model Provide Any Rationale for Monetary Targeting? (2000)
Working Paper: Does the P* Model Provide Any Rationale for Monetary Targeting? (2000)
Working Paper: Does the P* Model Provide Any Rationale for Monetary Targeting? (1999)
Working Paper: Does the P* Model Provide any Rationale for Monetary Targeting (1999)
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:hhs:iiessp:0671

Access Statistics for this paper

More papers in Seminar Papers from Stockholm University, Institute for International Economic Studies Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Hanna Christiansson ().