Arbeitspapier
Price level targeting and risk management
Many argue that, because the outlook for the economy is uncertain, monetary policy should apply a risk management approach by raising the policy interest rate gradually from its lower bound. Using a small New Keynesian model, I study the impact of outlook uncertainty on the economic performance of a central bank with a target for the price level or the level of nominal gross domestic product. I show that, in the presence of persistent supply and demand shocks, a price-level target is more effective at mitigating outlook uncertainty because it induces greater policy inertia and improves the tradeo¤s faced by the central bank.
- Language
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Englisch
- Bibliographic citation
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Series: Sveriges Riksbank Working Paper Series ; No. 302
- Classification
-
Wirtschaft
Price Level; Inflation; Deflation
Monetary Policy
Central Banks and Their Policies
- Subject
-
nominal level targets
optimal policy
inertial Taylor rule
- Event
-
Geistige Schöpfung
- (who)
-
Billi, Roberto
- Event
-
Veröffentlichung
- (who)
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Sveriges Riksbank
- (where)
-
Stockholm
- (when)
-
2016
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Billi, Roberto
- Sveriges Riksbank
Time of origin
- 2016
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