Of nutters and doves
By: Roc Armenter and Martin Bodenstein.
Contributors: Bodenstein, Martin.; Board of Governors of the Federal Reserve System (U.S.)
Series: International finance discussion papers -- no. 885; International finance discussion papers (Online) -- no. 885.
Publisher: Federal Reserve Board
Published: 2006
Place of publication: Washington, D.C
Language: eng
Format: Electronic resource
Description: "We argue that there are conditions such that any inflation targeting regime is preferable to full policy discretion, even if long-run inflation rates are identical across regimes.  The key observation is that strict inflation targeting outperforms the discretionary policy response to sufficiently persistent shocks.  Under full policy discretion, inflation expectations over the medium term respond to the shock and thereby amplify its impact on output.  As a result, little output stabilization is achieved at the cost of large and persistent inflation fluctuations"--Federal Reserve Board web site.
Notes: Title from PDF file as viewed on 3/22/2007.

Includes bibliographical references.

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