Average inflation targeting and interest-rate smoothing
DC Field | Value | Language |
---|---|---|
dc.contributor.author | Eo, Yunjong | - |
dc.contributor.author | Lie, Denny | - |
dc.date.accessioned | 2021-08-31T04:43:48Z | - |
dc.date.available | 2021-08-31T04:43:48Z | - |
dc.date.created | 2021-06-19 | - |
dc.date.issued | 2020-04 | - |
dc.identifier.issn | 0165-1765 | - |
dc.identifier.uri | https://scholar.korea.ac.kr/handle/2021.sw.korea/56743 | - |
dc.description.abstract | We study the welfare implication of average inflation targeting as a simple interest-rate rule, in which the monetary authority adjusts its short-term policy rate in response to the output gap as well as average inflation deviation from its target instead of reacting to the contemporaneous inflation rate as in a Taylor-type rule. We find that the welfare improvement achieved by switching to average inflation targeting from a standard Taylor rule is modest with a high degree of interest-rate smoothing, whereas it is significant without interest-rate smoothing. We show that average inflation targeting is welfare-improving in the same way as interest-rate smoothing by making the conduct of monetary policy history-dependent. Thus, the high degree of monetary policy inertia in the estimated interest-rate rules in many advanced economies implies that the welfare gain from adopting the average inflation targeting rule would be minimal. (c) 2020 Elsevier B.V. All rights reserved. | - |
dc.language | English | - |
dc.language.iso | en | - |
dc.publisher | ELSEVIER SCIENCE SA | - |
dc.subject | MONETARY-POLICY | - |
dc.subject | STABILIZATION | - |
dc.subject | RULES | - |
dc.title | Average inflation targeting and interest-rate smoothing | - |
dc.type | Article | - |
dc.contributor.affiliatedAuthor | Eo, Yunjong | - |
dc.identifier.doi | 10.1016/j.econlet.2020.109005 | - |
dc.identifier.wosid | 000526970300009 | - |
dc.identifier.bibliographicCitation | ECONOMICS LETTERS, v.189 | - |
dc.relation.isPartOf | ECONOMICS LETTERS | - |
dc.citation.title | ECONOMICS LETTERS | - |
dc.citation.volume | 189 | - |
dc.type.rims | ART | - |
dc.type.docType | Article | - |
dc.description.journalClass | 1 | - |
dc.description.journalRegisteredClass | ssci | - |
dc.description.journalRegisteredClass | scopus | - |
dc.relation.journalResearchArea | Business & Economics | - |
dc.relation.journalWebOfScienceCategory | Economics | - |
dc.subject.keywordPlus | MONETARY-POLICY | - |
dc.subject.keywordPlus | STABILIZATION | - |
dc.subject.keywordPlus | RULES | - |
dc.subject.keywordAuthor | New Keynesian model | - |
dc.subject.keywordAuthor | History-dependent policy | - |
dc.subject.keywordAuthor | Welfare analysis | - |
dc.subject.keywordAuthor | Ramsey policy | - |
dc.subject.keywordAuthor | Interest-rate rule | - |
dc.subject.keywordAuthor | Monetary policy inertia | - |
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