Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5099608 | Journal of Economic Dynamics and Control | 2007 | 24 Pages |
Abstract
This paper examines the welfare implications of managing asset-price with consumer-price inflation targeting by monetary authorities who have to learn the laws of motion for both inflation rates. The central bank can reduce the volatility of consumption as well as improve welfare more effectively if it adopts state-contingent Taylor rules aimed at inflation and Q-growth targets in this learning environment. However, under perfect model certainty, pure inflation targeting dominates combined consumer and asset-price inflation targeting.
Keywords
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
G.C. Lim, Paul D. McNelis,