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A Horse Race of Monetary Policy Regimes: An Experimental Investigation / Olena Kostyshyna, Luba Petersen, Jing Yang.
- Format:
- Book
- Author/Creator:
- Kostyshyna, Olena.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w30530.
- NBER working paper series no. w30530
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2022.
- Summary:
- We provide a comprehensive assessment of leading monetary policy frameworks away from and at the ELB. Inflation targeting, dual mandate, average inflation targeting under 4- and 10-period horizons, price level targeting, and nominal GDP level targeting are evaluated in a laboratory setting. Contrary to theoretical prediction with full information rational expectations, participants exhibit backward-looking expectations and, consequently, rate-targeting mandates outperform level targeting. More history dependence worsens macroeconomic stability. Inflation expectations are managed better when mandates are framed in terms of inflation rates than price levels. Central bank communication significantly improves the performance of price level targeting.
- Notes:
- Print version record
- October 2022.
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