Economics, Econometrics and Finance
4 years ago

Headline: Targeting headline inflation may destabilize output, sticky prices offer stability.

2 views
SSRN Electronic Journal
Inflation Targeting and Output Stability
Esteban Jadresic

Paper Summary

The paper explores how targeting different measures of inflation can impact the stability of an economy's output. When price shocks are expected, focusing on headline inflation can make output unstable, while targeting inflation indicators of sticky prices can help stabilize output in the face of shocks.

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