Mechanisms for achieving monetary stability: inflation targeting versus the ERM
Matthew B. Canzoneri, Charles Nolan, Anthony Yates, Centre for Economic Policy Research (Great Britain)
Centre for Economic Policy Research, 1996 - Business & Economics - 21 pages
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achieving monetary stability Ammer and Freeman Anthony Yates approach Bank of England bank's Barro-Gordon inflation bias Barro-Gordon model Canzoneri 1985 causing the stabilization Central Bank Governors Charles Goodhart costs credibility and stabilization credibility problem credibility-stabilization tradeoff discretionary solution distorting the stabilization economy Eichengreen eliminate the expected eliminate the inflation exchange rate expected inflation bias German policy Gordon model imposed inflation credibility inflation objective inflation rate inflationary expectations IS-LM model linear inflation penalties linear penalty linear W&PT penalty loss function low inflation mechanisms for achieving modify the Barro-Gordon natural rate nominal interest rate observed inflation penalties on inflation penalty on observed performance contract Persson and Tabellini political pressures political risk private sector productivity shock real interest rate real world respond to shocks Restore the Tradeoff Rogoff stabilization effort stabilization problem supply shock symmetric C&R penalty Tabellini 1993 targeting cum inflation tradeoff between credibility versus the ERM Walsh Zealand