Saborowski, Christian (2009) Inflation targeting as a means of achieving disinflation. Working Paper. University of Warwick, Department of Economics, Coventry.

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Abstract

In this paper, we take an analytical approach to examine possible adverse effects of the use of inflation targeting as a disinflation regime. The idea is that a strict interpretation of an inflation target may preserve inflationary distortions after price stability is attained. We show that such a policy not only creates a slump in output but may increase macroeconomic volatility substantially in a model in which wages are subject to a Taylor staggering structure.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HJ Public Finance
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Inflation (Finance), Monetary policy -- Mathematical models, Anti-inflationary policies
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	February 2009
Number:	No.894
Number of Pages:	48
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Funder:	Sixth Framework Programme (European Commission) (FP6)
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URI:	http://wrap.warwick.ac.uk/id/eprint/1323

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