An Inflation Goal with Multiple Reference Measures

35 Pages Posted: 10 Jan 2006

See all articles by William C. Whitesell

William C. Whitesell

Federal Reserve Board - Division of Monetary Affairs

Date Written: December 2005

Abstract

Most inflation-targeting central banks express their inflation objective in terms of a range for a single official inflation measure but generally have not clarified the meaning of the ranges and their implications for policy responses. In formulating policy, all central banks monitor multiple inflation indicators. This paper suggests an alternative approach to communicating an inflation goal: announcing point-values, rather than ranges, for a few key reference measures of inflation that are used in making policy. After reviewing and extending relevant theoretical and empirical studies, the paper argues that the alternative approach could more accurately reflect the concerns of policymakers and provide a better accountability structure for monetary policy performance.

Keywords: Inflation targeting, monetary policy regime

JEL Classification: E52, E58, E42

Suggested Citation

Whitesell, William C., An Inflation Goal with Multiple Reference Measures (December 2005). FEDS Working Paper No. 2005-62, Available at SSRN: https://ssrn.com/abstract=874082 or http://dx.doi.org/10.2139/ssrn.874082

William C. Whitesell (Contact Author)

Federal Reserve Board - Division of Monetary Affairs ( email )

20th and C Streets, NW
Mailstop 72
Washington, DC 20551
United States
202-452-2967 (Phone)
202-452-3819 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
122
Abstract Views
753
Rank
499,493
PlumX Metrics