Inflation Targeting as a Means of Achieving Disinflation

• Tác giả: Christian Saborowski
• Ngôn ngữ: eng
• Ký hiệu phân loại: 332.41 Value of money
• Thông tin xuất bản: 2012
• Bộ sưu tập: Tài liệu truy cập mở
• ID: 327231
• Chủ đề: 1. Business Fluctuations; 2. Deflation E310; 3. Inflation; 4. Macroeconomics: Production E230; 5. Price Level

Tóm tắt

In this paper, we take an analytical approach to examine possible adverse effects of the use of inflation targeting as a disinflation regime. The idea is that a strict interpretation of an inflation target may preserve inflationary distortions after price stability is attained. We show that such a policy not only creates a slump in output but may increase macroeconomic volatility substantially in a model in which wages are subject to a Taylor staggering structure. The policy implication is that the problems associated with an excessively rigid inflation targeting policy are even more severe during a disinflationary episode.