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

Keiichi Morimoto
''Inflation inertia and optimal delegation of monetary policy''
( 2011, Vol. 31 No.2 )
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.
Keywords: hybrid New Keynesian model; inflation targeting; policy weight
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Manuscript Received : Feb 02 2011 Manuscript Accepted : Apr 15 2011

  This abstract has been downloaded 1755 times                The Full PDF of this paper has been downloaded 152483 times