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| Keiichi Morimoto |
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| ''Inflation inertia and optimal delegation of monetary policy'' |
| ( 2011, Vol. 31 No.2 ) |
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| This paper analyzes the relationship between the optimal weight on output gap in the central bank's loss function and the degree of inertia in a hybrid version of New Keynesian model with a pure discretionary inflation targeting.
I show that under endogenous persistence of inflation dynamics, even in discretionary monetary policy regime, a Rogoff's (1985) conservative central banker does not necessarily improve social
welfare. |
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| Keywords: hybrid New Keynesian model; inflation targeting; policy weight |
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
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| Manuscript Received : Feb 02 2011 | | Manuscript Accepted : Apr 15 2011 |
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