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How Tolerant Should...
How Tolerant Should Inflation-Targeting Central Banks Be? Selecting the Proper Tolerance Band : Lessons from Sweden
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- Andersson, Fredrik N G (author)
- Lund University,Lunds universitet,Nationalekonomiska institutionen,Ekonomihögskolan,Department of Economics,Lund University School of Economics and Management, LUSEM
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- Jonung, Lars (author)
- Lund University,Lunds universitet,Nationalekonomiska institutionen,Ekonomihögskolan,Department of Economics,Lund University School of Economics and Management, LUSEM
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(creator_code:org_t)
- 2017
- English 22 s.
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Series: Working Papers
- Related links:
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http://swopec.hhs.se... (free)
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Abstract
Subject headings
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- 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.
- 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.
Subject headings
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business -- Economics (hsv//eng)
Keyword
- inflation target
- monetary policy
- tolerance band
- riksbank
- Sweden
- inflation targeting
- tolerance band
- tolerance interval
- monetary policy
- the Riksbank
- Sweden
- E30
- E31
- E58.
Publication and Content Type
- ovr (subject category)
- vet (subject category)
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