Inflation Targeting, Price-Path Targeting and Output Variability

Stephen Cecchetti and Junhan Kim ()

No 9672, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The dramatic improvement in macroeconomic outcomes during the 1990s - stable, low inflation and high, stable growth - can be at least partly ascribed to improved monetary policy. Central banks became more independent and many of them adopted inflation targeting. This paper examines the potential for further improvements by refining the concept of inflation targeting. We construct a general model that encompasses a broad array of possible target regimes, and apply it to the data. Our results suggest that the vast majority of countries could benefit from moving to pricepath targeting, where the central bank makes up for periods of above (below) target inflation with later periods of below (above) target inflation.

JEL-codes: E5 (search for similar items in EconPapers)
Date: 2003-05
New Economics Papers: this item is included in nep-lam, nep-mac and nep-mon
Note: EFG ME
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Citations: View citations in EconPapers (23)

Published as Inflation Targeting, Price-Path Targeting, and Output Variability , Stephen G. Cecchetti, Junhan Kim. in The Inflation-Targeting Debate , Bernanke and Woodford. 2005

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Chapter: Inflation Targeting, Price-Path Targeting, and Output Variability (2004)
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