Inflation targeting and nominal-income-growth targeting: When and why are they suboptimal?

• 成果类型: Article
• 署名作者: Kim, J; Henderson, DW
• 署名单位: Federal Reserve System - USA; Federal Reserve System Board of Governors
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2004.08.010
• 发表日期: 2005
• 页码: 1463-1495
• 关键词: Optimal monetary policy; interest-rate rule; inflation targeting; nominal-income-growth targeting; wage and price contracts

摘要

We compare optimal and simple interest-rate rules. Our model features optimizing agents, monopolistic competition in both product and labor markets, and one-period nominal contracts (for wages alone or for both wages and prices) signed before shocks are known. Exact solutions ensure that we obtain correct welfare rankings. Optimal rules maximize the unconditional expected utility of the representative agent with commitment subject to the information set of the policymaker. Even with monopolistic distortions, the optimal full-information rule makes the economy mimic the hypothetical full-flexibility equilibrium. Strict versions of inflation targeting, nominal-income-growth targeting, and other such simple rules are suboptimal under both full and partial information but flexible versions are optimal under certain partial-information assumptions. Nominal-income-growth targeting dominates inflation targeting for plausible parameter values. (c) 2005 Elsevier B.V. All rights reserved.