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 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.
| 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): | 05.09.2005 |
| Year of first Publication: | 2005 |
| Publishing Institution: | Univ.-Bibliothek Frankfurt am Main |
| 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): |  Veröffentlichungsvertrag für Publikationen ohne Print on Demand |
