Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/198218 
Year of Publication: 
2012
Citation: 
[Journal:] CES Working Papers [ISSN:] 2067-7693 [Volume:] 4 [Issue:] 4 [Publisher:] Alexandru Ioan Cuza University of Iasi, Centre for European Studies [Place:] Iasi [Year:] 2012 [Pages:] 809-823
Publisher: 
Alexandru Ioan Cuza University of Iasi, Centre for European Studies, Iasi
Abstract: 
The recent financial crisis that has led some central banks reaching the zero lower bound of their interest rate to use unconventional monetary policy instruments, has brought to the forefront the academic discussions on the shift from inflation targeting (IT) to price level targeting. This paper provides a comparative analysis on IT strategy and targeting the price level, assesses the implications and highlights the challenges of an eventual transition to a new monetary policy strategy. Balancing the adva ntages (mainly better anchored inflation expectations) and disadvantages (communication difficulties) generated by following a potential price-level targeting strategy and the necessary prerequisites for its functionality (predictive agents, fully familiar with the implications of such a strategy and with complete confidence in the monetary authority) has led us to the conclusion that there is no common acceptance that price level targeting strategy might replace the present IT framework.
Subjects: 
price-level targeting
inflation targeting
inflation expectations
deflation
zero-lower-bound Romania
JEL: 
E31
E52
Creative Commons License: 
cc-by Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.