A quantitative exploration of the opportunistic approach to disinflation

Under a conventional policy rule, a central bank adjusts its policy rate linearly according to the gap between inflation and its target, and the gap between output and its potential. Under "the opportunistic approach to 
Under a conventional policy rule, a central bank adjusts its policy rate linearly according to the gap between inflation and its target, and the gap between output and its potential. Under "the opportunistic approach to disinflation" a central bank controls inflation aggressively when inflation is far from its target, but concentrates more on output stabilization when inflation is close to its target, allowing supply shocks and unforeseen fluctuations in aggregate demand to move inflation within a certain band. We use stochastic simulations of a small-scale rational expectations model to contrast the behavior of output and inflation under opportunistic and linear rules. Klassifikation: E31, E52, E58, E61. July, 2005.
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Metadaten
Author:Yunus Aksoy, Athanasios Orphanides, David Small, Volker Wieland, David Wilcox
URN:urn:nbn:de:hebis:30-14345
Series (Serial Number):CFS working paper series (2005, 19)
Document Type:Working Paper
Language:English
Date of Publication (online):2005/09/05
Year of first Publication:2005
Publishing Institution:Univ.-Bibliothek Frankfurt am Main
Release Date:2005/09/05
Tag:Inflation targeting; disinflation; interest rates; monetary policy; policy rules
Source:CFS working paper ; 2005,19
HeBIS PPN:195625552
Institutes:Center for Financial Studies (CFS)
Dewey Decimal Classification:330 Wirtschaft
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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