All Rights Reserved
AccessEcon LLC 2006, 2008.
Powered by MinhViet JSC

 
Yamin Ahmad and James Murray
 
''Implications for determinacy with average inflation targeting''
( 2023, Vol. 43 No.1 )
 
 
We use a standard New Keynesian model to explore implications of backward- and forward-looking windows for monetary policy with average inflation targeting and investigate the conditions for determinacy. A unique equilibrium rules out sunspot shocks that can lead to self-fulfilling shocks for inflation expectations. We find limitations for the length of the forward window and demonstrate how this depends on other parameters in the model, including parameters governing monetary policy and expectations formation.
 
 
Keywords: Average Inflation Targeting, Indeterminacy, Monetary Policy, Policy Window
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
 
Manuscript Received : Jul 22 2022 Manuscript Accepted : Mar 30 2023

  This abstract has been downloaded 116 times                The Full PDF of this paper has been downloaded 166488 times