Policy Rules for Inflation Targeting

CEPR Discussion Paper Series No. 1999

Posted: 10 Feb 1999

See all articles by Lars E. O. Svensson

Lars E. O. Svensson

Stockholm School of Economics; Stockholm University - Institute for International Economic Studies (IIES); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Glenn D. Rudebusch

Federal Reserve Bank of San Francisco

Multiple version iconThere are 2 versions of this paper

Date Written: October 1998

Abstract

Policy rules that are consistent with inflation targeting are examined in a small macroeconometric model of the U.S. economy. We compare the properties and outcomes of explicit "instrument rules" as well as "targeting rules." The latter, which imply implicit instrument rules, may be closer to actual operating procedures of inflation-targeting central banks. We find that inflation forecasts are central for good policy rules under inflation targeting. Some simple instrument and targeting rules do remarkably well relative to the optimal rule; others, including some that are often used as representing inflation targeting, do less well.

Note: When this abstract appeared in a previous issue of Monetary Economics Abstracts, one of the authors was accidentally omitted. Above is the revised contact information for this abstract.

JEL Classification: E52, E58

Suggested Citation

Svensson, Lars E.O. and Rudebusch, Glenn D., Policy Rules for Inflation Targeting (October 1998). CEPR Discussion Paper Series No. 1999, Available at SSRN: https://ssrn.com/abstract=141403

Lars E.O. Svensson (Contact Author)

Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

HOME PAGE: http://larseosvensson.se

Stockholm University - Institute for International Economic Studies (IIES) ( email )

Stockholm, SE-10691
Sweden

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Glenn D. Rudebusch

Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States

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