scholarly journals Inflation-Output Gap Trade-Off With a Dominant Oil Supplier

2007 ◽  
Author(s):  
Anton A. Nakov ◽  
Andrea Pescatori
Keyword(s):  
Output Gap ◽  
Trade Off

POLICY PREFERENCES AND POLICY MAKERS' BELIEFS: THE GREAT INFLATION

2016 ◽  
Vol 21 (8) ◽  
pp. 1957-1995 ◽  
Author(s):  
Gabriela Best
Keyword(s):  
Monetary Policy ◽  
Federal Reserve ◽  
Alternative Explanation ◽  
The United States ◽  
Output Gap ◽  
Policy Makers ◽  
Trade Off ◽  
Great Inflation ◽  
Inflation Stabilization ◽  
Potential Channels

The literature has proposed two potential channels through which monetary policy played a role in the Great Inflation in the United States. One approach posits that the Federal Reserve held misperceptions of the economy. An alternative explanation contends that policy makers shifted preferences from an output gap stabilization goal toward inflation stabilization after 1979. This paper develops a medium-scale macroeconomic model that incorporates real-timelearningby policy makers as well as a (potential) shift in policy makers' preferences. The empirical results show that combining both views—distorted policy makers' beliefs about the persistence of inflation and the inflation-output gap trade-off, accompanied by a stronger preference for inflation stabilization after 1979—illuminates the role played by monetary policy in propagating and ending the Great Inflation.

Does Inflation Targeting Affect the Trade-off Between Output Gap and Inflation Variability?

2002 ◽  
Vol 70 (4) ◽  
pp. 528-545 ◽  
Author(s):  
Philip Arestis ◽  
Guglielmo Maria Caporale ◽  
Andrea Cipollini
Keyword(s):  
Inflation Targeting ◽  
Output Gap ◽  
Trade Off ◽  
Inflation Variability

scholarly journals Targeting Nominal Income Growth or Inflation?

2002 ◽  
Vol 92 (4) ◽  
pp. 928-956 ◽  
Author(s):  
Henrik Jensen
Keyword(s):  
Policy Making ◽  
Inflation Targeting ◽  
New Keynesian ◽  
Income Growth ◽  
Output Gap ◽  
New Keynesian Model ◽  
Trade Off ◽  
Keynesian Model ◽  
Trade Offs ◽  
Nominal Income

Within a simple New Keynesian model emphasizing forward-looking behavior of private agents, I evaluate optimal nominal income growth targeting versus optimal inflation targeting. When the economy is mainly subject to shocks that do not involve monetary policy trade-offs for society, inflation targeting is preferable. Otherwise, nominal income growth targeting may be superior because it induces inertial policy making, which improves the inflation–output-gap trade-off. Somewhat paradoxically, inflation targeting may be relatively less favorable the more society dislikes inflation, and the more persistent are the effects of inflation-generating shocks.

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