Inflation targeting with NAIRU uncertainty and endogenous policy credibility

Journal of Economic Dynamics and Control

Volumn 25, Issue 1-2, 2001, Pages 115-148

  Isard, Peter ^a   Laxton, Douglas ^a   Eliasson, Ann Charlotte ^a  

^a INTERNATIONAL MONETARY FUND   (United States)

Author keywords

C51; Credibility; E31; E52; Inflation targeting; Monetary policy rules; NAIRU uncertainty

Indexed keywords

EID: 0012431833     PISSN: 01651889     EISSN: None     Source Type: Journal    
DOI: 10.1016/S0165-1889(99)00071-8     Document Type: Article

References (51)

1. Amano, R., Coletti, D., Macklem, T., 1999. Monetary rules when economic behavior changes. In: Hunt, B., Orr, A. (Eds.), Monetary Policy Under Uncertainty, Reserve Bank of New Zealand, Wellington, 157-200.
2. Armstrong J., Black R., Laxton D., Rose D. A robust method for simulating forward-looking models. Journal of Economic Dynamics and Control. 22:1998;489-501.
3. Barro R.J., Gordon D.B. Positive theory of monetary policy in a natural rate model. Journal of Political Economy. 91:1983;589-610.
4. Barro R.J., Gordon D.B. Rules, discretion, and reputation in a model of monetary policy. Journal of Monetary Economics. 12:1983;101-121.
5. Batini N., Haldane A. Forward-looking rules for monetary policy. Taylor J. Monetary Policy Rules. 1999;University of Chicago Press, Chicago.
6. Bernanke, B.S., Mishkin, F.S., 1997. Inflation targeting: a new framework for monetary policy? Journal of Economic Perspectives 11, 97-116.
7. Callen, T., Laxton, D., 1998. A Small Macro Model of the Australian Inflation Process with Endogenous Policy Credibility. International Monetary Fund, Washington, unpublished.
8. Clark, P., Laxton, D., 1997. Phillips curves, Phillips lines and the unemployment costs of overheating. Working Paper 97/17, International Monetary Fund, Washington, February.
9. Clark P., Laxton D., Rose D. Asymmetry in the U.S. output-inflation nexus. issues and evidence IMF Staff Papers. 43:1996;216-250.
10. Debelle, G., 1997. Inflation targeting in practice. IMF Working Paper 97/35, International Monetary Fund, Washington, March.
11. Debelle G., Laxton D. Is the Phillips curve really a curve? Some evidence for Canada, the United Kingdom, and the United States. Staff Papers. 44:1997;249-282.
12. Debelle, G., Vickery, J., 1997. Is the Phillips curve a curve? Some evidence and implications for Australia. Economic Research Department, Reserve Bank of Australia, unpublished paper.
13. Drew, A., Hunt, B., Scott, A., 1999. Efficient simple policy rules and the implications of uncertainty about potential output. In: Hunt, B., Orr, A. (Eds.), Monetary Policy Under Uncertainty. Reserve Bank of New Zealand, Wellington, 73-102.
14. Faust, J.W., Svensson, L.E.O., 1999. Transparency and credibility: monetary policy with unobservable goals. Revised Draft of NBER Working Paper 6452, April.
15. Federal Reserve Bank of Kansas City, 1996. Achieving Price Stability: A Symposium. Kansas City, Missouri.
16. Fischer, S., 1996. Why are central banks pursuing long-run price stability? In: The Federal Reserve Bank of Kansas City, Achieving Price Stability: A Symposium.
17. Flood R., Garber P. A model of stochastic policy switching. Econometrica. 51:1983;537-552.
18. Flood R., Isard P. Monetary policy strategies. Staff Papers. International Monetary Fund. 37:1989;446-448.
19. Flood R., Isard P. Monetary policy strategies - a correction. Staff Papers, International Monetary Fund. 37:1990;446-448.
20. Freedman, C., 1996. What operating procedures should be adopted to main price stability? - practical issues. In: The Federal Reserve Bank of Kansas City, Achieving Price Stability: A Symposium.
21. Haldane, A.G. (Ed.), 1995. Targeting Inflation. Bank of England, London.
22. Hamilton J.D. Rational-expectations econometric analysis of changes in regime - an investigation of the term structure of interest rates. Journal of Economic Dynamics and Control. 12:1988;385-423.
23. Hamilton J.D. A new approach to the economic analysis of nonstationary time series and the business cycle. Econometrica. 57:1989;357-384.
24. Hodrick, R.J., Prescott, E.C., 1981. Post-war U.S. business cycles: an empirical investigation. Carnegie-Mellon Discussion Paper No. 451, Carnegie-Mellon University, Pittsburgh, May.
25. Isard P. Exchange Rate Economics. 1995;Cambridge University Press, Cambridge.
26. Isard, P., Laxton, D., 1996. Strategic choice in Phillips curve specification: what if Bob Gordon is wrong? Presented at a Conference on European Unemployment: Macroeconomic Aspects, Florence, Italy.
27. Isard, P., Laxton, D., 1999. Monetary policy with NAIRU uncertainty and endogenous policy credibility: perspectives on policy rules and the gains from experimentation and transparancy. In: Hunt, B., Orr, A. (Eds.), Monetary Policy Under Uncertainty, Reserve Bank of New Zealand, Wellington, 33-65.
28. Isard, P., Laxton, D., Eliasson, A.-C., 1999. Simple monetary policy rules under model uncertainty. In: Isard, P., Razin, A., Rose, A. (Eds.), International Finance and Financial Crises: Essays in Honor of Robert P. Flood Jr. International Monetary Fund, Washington; Kluwer, Boston.
29. Julliard M., Laxton D., McAdam P., Pioro H. An algorithm competition: first-order iterations versus Newton-based techniques. Journal of Economic Dynamics and Control. 22:1998;1275-1289.
30. Kaminsky, G., Leiderman, L., 1998. High real interest rates in the aftermath of disinflation: is it a lack of credibility? Journal of Development Economics 55, 191-214.
31. Kohn, D., Comment. In: Taylor, J. (Ed.), Monetary Policy Rules. University of Chicago Press, Chicago.
32. Kuttner, K.N., 1991. Using noisy indicators to measure potential output. Federal Reserve Bank of Chicago, Working Paper No. 91-14, Federal Reserve Bank of Chicago, Chicago, pp. 1-27.
33. Kuttner, K.N., 1992. Monetary policy with uncertain estimates of potential output. Reserve Bank of Chicago Economic Perspectives (January-February), pp. 2-15.
34. Kuttner K.N. Estimating potential output as a latent variable. Research Department, Federal Reserve Bank of Chicago. Journal of Business and Economic Statistics. 12(3):1994;55-79.
35. Laxton, D., Ricketts, N., Rose, D., 1994. Uncertainty, learning and policy credibility. In: Poloz, S. (Ed.), Economic Behavior and Policy Choice Under Price Stability. Bank of Canada, Ottawa, June.
36. Laxton D., Rose D., Tambakis D. The U.S. Phillips curve: the case for asymmetry. Journal of Economic Dynamics and Control. 23:1999;1459-1485.
37. Leiderman, L., Svensson, L.E.O., (Eds.), 1995. Inflation Targets. Centre of Economic Policy Research, London.
38. Levin A., Wieland V., Williams J. Robustness of simple monetary policy rules under model uncertainty. Taylor J. Monetary Policy Rules. 1999;University of Chicago Press, Chicago.
39. Lowe, P. (Ed.), 1997. Monetary Policy and Inflation Targeting. Reserve Bank of Australia, Sydney.
40. McCallum B. Robustness properties of a rule for monetary policy. Carnegie-Rochester Series on Public Policy. 29:1988;173-203.
41. Orphanides, A., 1999. The quest for prosperity without inflation. Draft, Federal Reserve Board, May.
42. Rogoff K. The optimal degree of commitment to an international monetary target. Quarterly Journal of Economics. 100:1985;1169-1189.
43. Rudebusch G., Svensson L. Policy rules for inflation targeting. Taylor J. Monetary Policy Rules. 1999;University of Chicago Press, Chicago.
44. Smets, F., 1999. Output gap uncertainty: does it matter for the Taylor rule? In: Hunt, B., Orr, A. (Eds.), Monetary Policy Under Uncertainty, Reserve Bank of New Zealand, Wellington, 10-29.
45. Summers, L., 1988. Should Keynesian economics dispense with the Phillips Curve? In: Cross, R. (Ed.), Unemployment, Hysteresis and the Natural Rate Hypothesis, United Kingdom, Oxford; Blackwell, New York. pp. 11-25.
46. Svensson L.E.O. Optimal inflation targets, 'Conservative' Central Banks, and Linear Inflation Contracts. American Economic Review. 87:1997;98-114.
47. Svensson L.E.O. Inflation targeting as a monetary policy rule. Journal of Monetary Economics. 43:1999;607-654.
48. Tarditi, A., 1996. Modeling the Australian exchange rate, long bond yield and inflationary expectations. Reserve Bank of Australia Research Discussion Paper No. 9608, November.
49. Taylor, J., 1993. Discretion versus policy rules in practice. Carnegie-Rochester Conference Series on Public Policy, Vol. 39, December, pp. 195-214.
50. Taylor J. An historical analysis of monetary policy rules. Taylor J. Monetary Policy Rules. 1999;University of Chicago Press, Chicago.
51. Tetlow, R.J., von zur Muehlen, P., Finan, F., Simplicity versus optimality: the choice of monetary policy rules when agents must learn. In: Hunt, B., Orr, A. (Eds.), Monetary Policy Under Uncertainty, Reserve Bank of New Zealand, Wellington, 113-153.