Inflation and Its Variation: An Alternative Explanation

Petra Geraats ()

Macroeconomics from University Library of Munich, Germany

Abstract: This paper introduces a general objective function for monetary policy that abandons certainty equivalence and features 'prudence'. It provides an alternative explanation for the positive relation between the level and variability of inflation, both across countries and over time. In particular, the model predicts that high (low) inflation tends to be more variable (stable) over time.

JEL-codes: E31 E52 E61 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2000-04-04
New Economics Papers: this item is included in nep-mon
Note: 25 pages Adobe.pdf
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Citations: View citations in EconPapers (3)

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https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0004/0004001.pdf (application/pdf)

Related works:
Working Paper: Inflation and Its Variation: An Alternative Explanation (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0004001

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