Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105135
Authors: 
Walsh, Carl
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 5097
Abstract: 
Many inflation targeting central banks are facing calls to expand their list of policy goals. I discuss how recent research provides new insights into the goals of policy and the tradeoffs presented by multiple goals. I focus particular attention on the role of unemployment and labor market frictions, but I also discuss the role of currency misalignment in affecting policy objectives in open economies. Current models often find that price stability is close to the optimal policy, even when, in theory, the central bank should care about multiple goals. I offer some ideas about why this might be the case.
Subjects: 
inflation targeting
monetary policy tradeoffs
central banks
Document Type: 
Working Paper

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