The Advantage of Flexible Targeting Rules

Material TypeArticleLanguageEnglish
TitleThe Advantage of Flexible Targeting Rules Author(S)ANDREA FERRERO (Author)
Abstract  This paper investigates the consequences of debt stabilization for inflation targeting. If the fiscal authority holds constant the real value of debt at maturity under strict inflation targeting, the equilibrium dynamics are indeterminate for a wide range of parameters and steady-state fiscal stances. “Flexible” targeting rules that include a concern for stabilization of the output gap can restore determinacy of the equilibrium ...Paginationp863–881
Journal TitleJournal of Money, Credit, and Banking  
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