Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets
Lars E. O. Svensson
Sveriges Riksbank; Stockholm University - Institute for International Economic Studies (IIES); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)
EUROPEAN ECONOMIC REVIEW
**The following is a description of the paper and not the actual abstract.**Inflation targeting is shown to imply inflation forecast targeting: the central bank's inflation forecast becomes an explicit intermediate target. Inflation forecast targeting simplifies both implementation and monitoring of monetary policy. The weight on output stabilization determines how quickly the inflation forecast is adjusted towards the inflation target. Money growth or exchange rate targeting is generally inferior than inflation targeting and leads to higher inflation variability. Commitment to 'target rules' may be better than commitment to 'instrument rules'.
JEL Classification: E42, E52, E58Accepted Paper Series
Date posted: November 25, 1996
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