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Title:In noise we trust? Optimal monetary policy with random targets PDF Logo
Authors:Cohen-Cole, Ethan
Cosmaciuc, Bogdan
Issue Date:2006
Series/Report no.:Working paper series // Federal Reserve Bank of Boston 06-14
Abstract:We show that a monetary policy in which the central bank commits to a randomized inflation target allows for potentially faster-expectations convergence than with a fixed target. The randomized target achieves faster convergence in particular in transition environments: those demonstrating either particularly high or low inflation.
Subjects:Monetary policy
asymmetric information
Bayesian rational expectations
commitment
JEL:E52
E61
E42
Document Type:Working Paper
Appears in Collections:Working Paper Series, Federal Reserve Bank of Boston

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