Add to ORKGWhat rule should a central bank interested in inflation stability follow? Because monetary policy tends to work with lags, it is tempting to use inflation forecasts to generate policy advice. This article, however, suggests that the use of forecasts to drive policy is potentially destabilizing. The problem with forecast-based policy is that the economy becomes vulnerable to what economists term “sunspot” fluctuations. These welfare-reducing fluctuations can be avoided by using a policy that puts greater weight on past, realized inflation rates rather than forecasted, future rates.Monetary policy ; Inflation (Finance) ; Forecasting
The mainstream inflation-targeting literature makes the strong assumption that the central bank can ...
This paper analyzes the value of communication in the implementation of monetary policy. The central...
The near‐universal practice of inflation targeting has strengthened the belief of central banks that...
At central banks around the world, including the Bank of England, Sweden's Riksbank, Norway's Norges...
Monetary policy rules help central banks exercise the discipline necessary to achieve their long-ter...
Central banks pay close attention to inflation expectations. In standard models, however, inflation ...
This article provides an overview of inflation-forecast targeting (IFT) to build credibility and mai...
The central tenet of inflation targeting is the anchoring of inflation expectations. In this paper, ...
The central tenet of inflation targeting is the anchoring of inflation expectations. In this paper, ...
This article explores the role of inflation expectations in the conduct of monetary policy. It revie...
Forecast targeting is an innovation in central banking that represents an important step toward more...
This paper evaluates the role of inflation-forecast heterogeneity in US monetary policy making. The ...
The mainstream inflation-targeting literature makes the strong assumption that the central bank can ...
Central banks pay close attention to inflation expectations. In standard models, however, inflation ...
The value of communication in monetary policy is analyzed in a model in which expectations need not ...
The mainstream inflation-targeting literature makes the strong assumption that the central bank can ...
This paper analyzes the value of communication in the implementation of monetary policy. The central...
The near‐universal practice of inflation targeting has strengthened the belief of central banks that...
At central banks around the world, including the Bank of England, Sweden's Riksbank, Norway's Norges...
Monetary policy rules help central banks exercise the discipline necessary to achieve their long-ter...
Central banks pay close attention to inflation expectations. In standard models, however, inflation ...
This article provides an overview of inflation-forecast targeting (IFT) to build credibility and mai...
The central tenet of inflation targeting is the anchoring of inflation expectations. In this paper, ...
The central tenet of inflation targeting is the anchoring of inflation expectations. In this paper, ...
This article explores the role of inflation expectations in the conduct of monetary policy. It revie...
Forecast targeting is an innovation in central banking that represents an important step toward more...
This paper evaluates the role of inflation-forecast heterogeneity in US monetary policy making. The ...
The mainstream inflation-targeting literature makes the strong assumption that the central bank can ...
Central banks pay close attention to inflation expectations. In standard models, however, inflation ...
The value of communication in monetary policy is analyzed in a model in which expectations need not ...
The mainstream inflation-targeting literature makes the strong assumption that the central bank can ...
This paper analyzes the value of communication in the implementation of monetary policy. The central...
The near‐universal practice of inflation targeting has strengthened the belief of central banks that...