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IS IT TIME FOR PRICE‐LEVEL TARGETING?
Author(s) -
Ambler Steve
Publication year - 2009
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/j.1468-0270.2009.01916.x
Subject(s) - economics , inflation (cosmology) , price level , monetary economics , interest rate , inflation targeting , monetary policy , macroeconomics , physics , theoretical physics
This paper summarises arguments for and against a shift by central banks from inflation targeting to price‐level targeting. It concludes that the weight of the evidence favours a shift. One of the advantages of price‐level targeting is its superior macroeconomic performance when short‐term nominal interest rates are close to zero. Since this is the current situation facing many central banks, it may also be politically opportune to consider such a switch.