The Perils of Nominal Targets

• 成果类型: Article
• 署名作者: Armenter, Roc
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Philadelphia
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdx001
• 发表日期: 2018
• 页码: 50-86
• 关键词: optimal monetary-policy; expectation traps; interest-rates; price-level; optimal inflation; liquidity traps; fiscal-policy; COMMITMENT; rules; PERSPECTIVE

摘要

A monetary authority can be committed to pursuing an inflation, price-level, or nominal-GDP target, yet systematically fail to achieve the prescribed goal. Constrained by the zero lower bound on the policy rate, the monetary authority is unable to implement its objectives when private sector expectations stray far enough from the target. Low-inflation expectations become self-fulfilling, resulting in an additional Markov equilibrium in which the monetary authority falls short of the nominal target, average output is below its efficient level, and the policy rate is typically low. Introducing a stabilization goal for long-term nominal rates can implement a unique Markov equilibrium without fully compromising stabilization policy.