Seppo Honkapohja

Séminaires généraux
AMSE lecture

Seppo Honkapohja

Aalto University School of Business
Price level targeting under evolving credibility
Co-écrit avec
Kaushik Mitra
Lieu

IBD Amphi

Îlot Bernard du Bois - Amphithéâtre

AMU - AMSE
5-9 boulevard Maurice Bourdet
13001 Marseille

Date(s)
Lundi 15 octobre 2018| 14:30 - 16:30
Résumé

We examine global dynamics under learning in a nonlinear New Keynesian model when monetary policy uses price-level targeting and compare it to inflation targeting. Domain of attraction of the targeted steady state gives a robustness criterion for policy regimes. Robustness of price-level targeting depends on whether a known target path is incorporated into learning. Credibility is measured by accuracy of this forecasting method relative to simple statistical forecasts. Credibility evolves through reinforcement learning. Initial credibility and initial level of target price are key factors influencing performance. Results match the Swedish experience of price level stabilization in 1920's and 30s.

Plus d'informations