Instability under nominal GDP targeting: the role of expectations
Richard Dennis, Australian National University. Faculty of Economics and Commerce, Australian National University. Research School of Social Sciences. Economics Program
Faculty of Economics & Commerce, and Economics Program, Research School of Social Sciences, Australian National University, 1998 - Inflation - 32 pages
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accelerationist Phillips curve adaptive expectations Assume Atsushi Kajii Australian National University Ball Ball-Svensson instability result BHM rule canceling terms central banks coefficients eigenvalues equation exact nominal GDP expectations are formed expectations rationally forms its expectations forward-looking expectations GDP growth targeting GDP level targeting Hall and Mankiw inexact targeting inflation and output inflation expectations inflation forecast targeting Inflation Targeting interest rate smoothing lead to instability loss function Mardi Dungey model is unstable monetary policy affects Moral Hazard nominal GDP growth nominal GDP level nominal GDP targeting optimal policy reaction output and inflation output gap Papers in Economics period's inflation rate periods policy makers policy reaction function Policy Rules private agents form Rational expectations reduced form system restriction Richard Dennis Rohan Pitchford roots section 2.1 show that nominal Simon Grant stable provided Substituting supply side Svensson 1997b system is stable t-1 information target nominal GDP Taylor rule unit circle