Inflation targets, credibility, and persistence in a simple sticky-price framework

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Title: Inflation targets, credibility, and persistence in a simple sticky-price framework
Authors: Whelan, Karl
Rudd, Jeremy
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Date: 23-Jul-2003
Abstract: This paper presents a re-formulated version of a canonical sticky-price model that has been extended to account for variations over time in the central bank's inflation target. We derive a closed-form solution for the model, and analyze its properties under various parameter values. The model is used to explore topics relating to the effects of disinflationary monetary policies and inflation persistence. In particular, we employ the model to illustrate and assess the critique that standard sticky-price models generate counterfactual predictions for the effects of monetary policy.
Type of material: Working Paper
Publisher: Federal Reserve
Keywords: InflationPhillips curve
Subject LCSH: Inflation (Finance)
Phillips curve
Monetary policy
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Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Research Collection

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