Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
958252 | Journal of Economics and Business | 2006 | 19 Pages |
Abstract
Price stability can be attained through price-level or inflation targeting. This paper compares the two monetary policy strategies from both a historical and a theoretical perspective. The Swedish experiment with price-level targeting in the 1930 occurred within a framework that lacked the accountability characteristic of New Zealand's current policy framework for inflation-targeting. Using a simple forward-looking rational expectations framework, we show that price-level targeting offers a better output-inflation variability tradeoff than inflation targeting in the forward-looking New Keynesian framework.
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Authors
Alfred V. Guender, Do Yoon Oh,