Does it matter (for equilibrium determinacy) what price-index the central bank targets?

• 成果类型: Article
• 署名作者: Carlstrom, Charles T.; Fuerst, Timothy S.; Ghironi, Fabio
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Cleveland; University System of Ohio; Bowling Green State University; Boston College
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2004.09.003
• 发表日期: 2006
• 页码: 214-231
• 关键词: Determinacy; sectoral Taylor Rule; taylor principle

摘要

What inflation rate should the central bank target? We address determinacy issues related to this question in a two-sector model in which prices can differ in equilibrium. We assume that the degree of nominal price stickiness can vary across the sectors and that labor is immobile. The contribution of this paper is to demonstrate that a modified Taylor Principle holds in this environment. If the central bank elects to target sector one, and if it responds with a coefficient greater than unity to price movements in this sector, then this policy rule will ensure determinacy across all sectors. The results of this paper have at least two implications. First, the equilibrium-determinacy criterion does not imply a preference to any particular measure of inflation. Second, since the Taylor Principle applies at the sectoral level, there is no need for a Taylor Principle at the aggregate level. (c) 2004 Elsevier Inc. All rights reserved.