Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82420
Authors: 
Söderström, Ulf
Year of Publication: 
2001
Series/Report no.: 
Sveriges Riksbank Working Paper Series 123
Abstract: 
This paper demonstrates how a target for money growth can be beneficial for an inflation targeting central bank acting under discretion. Because the growth rate of money is closely related to the change in the interest rate and he growth of real output, delegating a money growth target to the central bank makes discretionary policy more inertial, leading to better social outcomes. This delegation scheme is also compared with other schemes suggested in the literature. Although other delegation schemes are sometimes more efficient, the results indicate that giving a prominent role to a money growth indicator can be a sensible strategy for monetary policy.
Subjects: 
Discretion
commitment
monetary policy inertia
inflation targeting
monetary targeting
JEL: 
E41
E51
E52
E58
Document Type: 
Working Paper

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