LEADER 04993oam 22010454 450 001 9910824789103321 005 20240402050823.0 010 $a1-4623-2348-0 010 $a1-4527-7227-4 010 $a1-282-84314-1 010 $a9786612843143 010 $a1-4518-7241-0 035 $a(CKB)3390000000010617 035 $a(EBL)1608103 035 $a(MiAaPQ)EBC1608103 035 $a(Au-PeEL)EBL1608103 035 $a(CaPaEBR)ebr10368718 035 $a(OCoLC)551147546 035 $a(IMF)WPIEE2009094 035 $a(EXLCZ)993390000000010617 100 $a20020129d2009 uf 0 101 0 $aeng 135 $aur|n|---||||| 181 $ctxt$2rdacontent 182 $cc$2rdamedia 183 $acr$2rdacarrier 200 10$aInflation Targeting Under Imperfect Policy Credibility 205 $a1st ed. 210 1$aWashington, D.C. :$cInternational Monetary Fund,$d2009. 215 $a1 online resource (32 p.) 225 1 $aIMF Working Papers 300 $aDescription based upon print version of record. 320 $aIncludes bibliographical references. 327 $aContents; I. Introduction; II. The Model; A. Inflation Process with Endogenous Credibility; A.1 Inflation equation-an expectations-augmented Phillips curve; A.2 Output Gap equation; A.3 Exchange rate-real interest rate parity equation; A.4 Monetary policy loss function; A.5 Note on calibration; III. Optimal Disinflation; A. Initial Condition; B. Disinflation Under Various Degrees of Credibility; IV. Optimal Responses to Shocks; A. Initial Conditions; B. Supply Shocks; C. Demand Shocks; V. Costs of Delaying Interest Rate Increase Under Imperfect Credibility; VI. Concluding Remarks; References 327 $aFigures1. Disinflation with Equal Weights on Inflation, Output and Interest Rate Variability; 2. Disinflation with Lower Weights on Output and Interest Rate Variability; 3. Responses to Unfavorable and Favorable Supply Shocks (Positive Shock Circle; Negative Shock Triangle); 4. Responses to Positive and Negative Demand Shocks (Positive Shock Circle Negative Shock Triangle; 5. Cost of Delaying Interest Rate Hikes in Response to an Unfavorable Supply Shock in an Economy with High Inflation and Low Initial Credibility (No Delay Triangle; Delay Circle) 330 3 $aThis paper presents a model for Inflation Targeting under imperfect policy credibility. It modifies the conventional model in three ways: an endogenous policy credibility process, by which monetary policy can gain or lose credibility over time; non-linearities in the inflation equation and in the credibility generating process; and an explicit loss function. The model highlights problems associated with the practice of setting a series of rigid near-term inflation targets. Also, unfavorable supply shocks pose a difficult problem: an appropriate response involves an interest rate increase, some loss of output, and a period of increased inflation. A delayed response can result in a prolonged period of stagflation. 410 0$aIMF Working Papers; Working Paper ;$vNo. 2009/094 606 $aInflation (Finance) 606 $aFiscal policy 606 $aInflation$2imf 606 $aMoney and Monetary Policy$2imf 606 $aEconomic Theory$2imf 606 $aProduction and Operations Management$2imf 606 $aPrice Level$2imf 606 $aDeflation$2imf 606 $aMonetary Policy$2imf 606 $aMacroeconomics: Production$2imf 606 $aAgriculture: Aggregate Supply and Demand Analysis$2imf 606 $aPrices$2imf 606 $aMacroeconomics$2imf 606 $aMonetary economics$2imf 606 $aEconomic theory & philosophy$2imf 606 $aInflation targeting$2imf 606 $aOutput gap$2imf 606 $aSupply shocks$2imf 606 $aDisinflation$2imf 606 $aMonetary policy$2imf 606 $aProduction$2imf 606 $aEconomic theory$2imf 606 $aSupply and demand$2imf 607 $aUnited States$2imf 615 0$aInflation (Finance) 615 0$aFiscal policy. 615 7$aInflation 615 7$aMoney and Monetary Policy 615 7$aEconomic Theory 615 7$aProduction and Operations Management 615 7$aPrice Level 615 7$aDeflation 615 7$aMonetary Policy 615 7$aMacroeconomics: Production 615 7$aAgriculture: Aggregate Supply and Demand Analysis 615 7$aPrices 615 7$aMacroeconomics 615 7$aMonetary economics 615 7$aEconomic theory & philosophy 615 7$aInflation targeting 615 7$aOutput gap 615 7$aSupply shocks 615 7$aDisinflation 615 7$aMonetary policy 615 7$aProduction 615 7$aEconomic theory 615 7$aSupply and demand 676 $a332.1 801 0$bDcWaIMF 906 $aBOOK 912 $a9910824789103321 996 $aInflation Targeting Under Imperfect Policy Credibility$94051248 997 $aUNINA