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Average inflation targeting and the interest rate lower bound
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| Personen und Körperschaften: | , , |
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| Titel: | Average inflation targeting and the interest rate lower bound/ Flora Budianto, Taisuke Nakata, Sebastian Schmidt |
| Format: | E-Book |
| Sprache: | Englisch |
| veröffentlicht: |
Frankfurt am Main, Germany
European Central Bank
[2020]
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| Gesamtaufnahme: |
Europäische Zentralbank: Working paper series ; no 2394 (April 2020)
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| Quelle: | Verbunddaten SWB Lizenzfreie Online-Ressourcen |
| Zusammenfassung: | Assigning a discretionary central bank a mandate to stabilize an average in ation rate| rather than a period-by-period in ation rate|increases welfare in a New Keynesian model with an occasionally binding lower bound on nominal interest rates. Under rational expecta- tions, the welfare-maximizing averaging window is infinitely long, which means that optimal average in ation targeting (AIT) is equivalent to price level targeting (PLT). However, AIT with a finite, but sufficiently long, averaging window can attain most of the welfare gain from PLT. Under boundedly-rational expectations, if cognitive limitations are sufficiently strong, the optimal averaging window is finite, and the welfare gain of adopting AIT can be small. |
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| Umfang: | 1 Online-Ressource (circa 31 Seiten); Illustrationen |
| ISBN: |
9789289940375
9289940379 |
| DOI: | 10.2866/695844 |