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How to Weigh Unemployment Relative to Inflation in Monetary Policy?
Author(s) -
SVENSSON LARS E.O.
Publication year - 2014
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/jmcb.12158
Subject(s) - economics , inflation (cosmology) , unemployment , monetary policy , mandate , misery index , inflation targeting , monetary economics , output gap , real interest rate , macroeconomics , physics , theoretical physics , political science , law
The monetary policy mandate for the Federal Reserve and of the Riksbank are essentially the same and boil down to stabilizing inflation around the inflation target and employment or unemployment around a long‐run sustainable rate. The relative weight on stabilizing unemployment or employment versus stabilizing inflation may be close to one. A positive unemployment‐gap forecast normally calls for a positive inflation‐gap forecast.