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

Lars Svensson

No 7178, NBER Working Papers from National Bureau of Economic Research, Inc

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 determined by the level of and changes in the 'money gap' (the deviation of current real balances from their long-run equilibrium level), and hence that the real 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.

JEL-codes: E42 E52 (search for similar items in EconPapers)
Date: 2000-06
New Economics Papers: this item is included in nep-mon
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (42)

Published as German Economic Review, Vol. 1, no. 1 (February 2000): 69-81.

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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? (1999)
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)
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