Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/260211
Year of Publication: 
2017
Series/Report no.: 
Working Paper No. 2017:2
Publisher: 
Lund University, School of Economics and Management, Department of Economics, Lund
Abstract: 
Should an inflation-targeting central bank have an explicit tolerance band around its inflation target? This paper provides an answer derived from the Swedish experience. The Riksbank is exceptional in the sense that it first adopted and later abolished an explicit band and is currently considering bringing it back. We conclude that the band should be explicit for several reasons. Most important, an inflation-targeting central bank should be open and transparent to the public regarding its actual ability to control inflation. We discuss how a numerical measure of the proper width of the band can be constructed to foster communication and credibility.
Subjects: 
inflation targeting
tolerance band
tolerance interval
monetary policy
the Riksbank
Sweden
JEL: 
E30
E31
E58
Document Type: 
Working Paper

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