Inflation Targeting: Should it Be Modeled as an Instrument Rule or a Targeting Rule?
13 Pages Posted: 3 May 2002 Last revised: 21 Nov 2022
Date Written: May 2002
Abstract
The paper discusses how current inflation targeting should be modeled, and argues that it is better represented as a commitment to a targeting rule (a rule specifying operational objectives for monetary policy or a condition for the target variables), than as a commitment to a simple instrument rule (like a Taylor rule).
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