Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/209851 
Year of Publication: 
2005
Series/Report no.: 
Working Paper No. 2005/4
Publisher: 
Norges Bank, Oslo
Abstract: 
A hybrid inflation/price-level target combines elements of both inflation and price-level targets. The paper derives a hybrid target within a new Keynesian model with inflation persistence due to price indexation. The result generalizes a result by Vestin (2005) that the optimal policy could be implemented with a price-level targeting regime. We show that the optimal price-level drift in the hybrid target is equal to the degree of price indexation.
Subjects: 
price-level target
inflation persistence
commitment
JEL: 
E52
E61
E63
Persistent Identifier of the first edition: 
ISBN: 
82-7553-301-5
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
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