Inflation Targeting as a Means of Achieving Disinflation

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 p...

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Bibliographic Details
Main Author:	Saborowski, Christian
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Macroeconomics: Production E230 Price Level Inflation Deflation E310 Business Fluctuations Cycles E320 Monetary Policy E520
Online Access:	http://hdl.handle.net/10986/4907

id	okr-10986-4907
recordtype	oai_dc
spelling	okr-10986-49072021-04-23T14:02:20Z Inflation Targeting as a Means of Achieving Disinflation Saborowski, Christian Macroeconomics: Production E230 Price Level Inflation Deflation E310 Business Fluctuations Cycles E320 Monetary Policy E520 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. 2012-03-30T07:30:19Z 2012-03-30T07:30:19Z 2010 Journal Article Journal of Economic Dynamics and Control 01651889 http://hdl.handle.net/10986/4907 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Macroeconomics: Production E230 Price Level Inflation Deflation E310 Business Fluctuations Cycles E320 Monetary Policy E520
spellingShingle	Macroeconomics: Production E230 Price Level Inflation Deflation E310 Business Fluctuations Cycles E320 Monetary Policy E520 Saborowski, Christian Inflation Targeting as a Means of Achieving Disinflation
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	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.
format	Journal Article
author	Saborowski, Christian
author_facet	Saborowski, Christian
author_sort	Saborowski, Christian
title	Inflation Targeting as a Means of Achieving Disinflation
title_short	Inflation Targeting as a Means of Achieving Disinflation
title_full	Inflation Targeting as a Means of Achieving Disinflation
title_fullStr	Inflation Targeting as a Means of Achieving Disinflation
title_full_unstemmed	Inflation Targeting as a Means of Achieving Disinflation
title_sort	inflation targeting as a means of achieving disinflation
publishDate	2012
url	http://hdl.handle.net/10986/4907
_version_	1764393196793626624

Inflation Targeting as a Means of Achieving Disinflation

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