Skip to main content Skip to main content

Inflation-Targeting, Price-Path Targeting and Indeterminacy

In this paper, we examine the areas of indeterminacy in a flexible price RBC model with shopping time role for money and a central bank that uses an interest rate rule to target inflation and/or the price level. We present analytical results showing that, although inflation targeting often results in real indeterminacy, a price level target generally delivers a unique equilibrium for a relevant range of policy parameters.

Read Full Text

https://doi.org/10.20955/wp.2004.007

https://doi.org/10.1016/j.econlet.2005.03.003