Maintaining price stability: how long is the medium term?

• 成果类型: Article
• 署名作者: Smets, F
• 署名单位: Centre for Economic Policy Research - UK; Ghent University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/S0304-3932(03)00084-9
• 发表日期: 2003
• 页码: 1293-1309
• 关键词: Monetary policy; Price stability; policy rules; euro area

摘要

Using a small estimated forward looking model of the euro area economy, this paper analyses the determinants of the optimal monetary policy horizon for maintaining price stability. First, the optimal policy horizon for a price level objective is generally longer than that for an inflation objective. Second, the policy horizon becomes longer, the greater the weight on other objectives like minimising output gap and interest rate variability. Third, the optimal policy horizon is shorter, the higher the degree of forward-lookingness in the economy and the greater the slope of the Phillips curve. Finally, even if society cares only about inflation stabilisation, it often pays to give the central bank a price level objective, provided the horizon is optimally chosen to be somewhat longer. (C) 2003 Elsevier B.V. All rights reserved.