The Reader's Guide to Optimal Monetary Policy
31 Pages Posted: 20 Jun 2017 Last revised: 26 Jun 2017
Date Written: June 18, 2017
Recently, multiple economists have banded together to suggest to the Federal Reserve that the inflation target needs to be changed. The inflation target is the core through which monetary policy makers rationalize their decisions while following the dual mandate of maximum employment and price stability. Understanding the rationale for its level, 2%, and understanding the academic literature related to optimal inflation dynamics seems more important than ever before. This survey takes into account every optimal monetary policy paper made available to the public since the mid-1990s and provides a careful discussion on the most important costs and benefits of inflation.
Keywords: Optimal Monetary Policy, Inflation, Federal Reserve
JEL Classification: E5, G00, E00
Suggested Citation: Suggested Citation