Speed limit policies versus inflation targeting: a free lunch?

Hatcher, Michael C. 2008. Speed limit policies versus inflation targeting: a free lunch? [Working Paper]. Cardiff Economics Working Papers, Cardiff: Cardiff University. Available at: http://www.cf.ac.uk/carbs/econ/workingpapers/paper...

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Abstract

Inflation targeting is currently popular with central banks. Is this popularity justified? I investigate this question by comparing a speed limit policy and inflation targeting with a Lucas-type Phillips curve capturing output gap persistence. If the output gap is at least moderately persistent, a speed limit policy can: (1) partly eliminate the state contingent inflation bias, and (2) reduce inflation variability at no output gap variability cost.

Item Type:	Monograph (Working Paper)
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory
Uncontrolled Keywords:	inflation targeting ; speed limit policy ; inflation bias ; discretion ; stabilisation
Publisher:	Cardiff University
Funders:	ESRC
Last Modified:	19 Mar 2016 22:11
URI:	https://orca.cardiff.ac.uk/id/eprint/6914

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