Inflation versus Price-Level Targeting : Bayesian Estimation of a Small Open DSGE Model for Switzerland

Language: English

Published by Springer Fachmedien Wiesbaden, Springer Fachmedien Wiesbaden, 2014

3658082275 / 9783658082277

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Druck auf Anfrage Neuware - Printed after ordering - Lukas Heim evaluates the performance of a price-level targeting rule compared to that of a standard inflation targeting rule. The comparison is based on a medium-scale DSGE model which has been estimated based on state-of-the-art Bayesian methods. The model for the Swiss economy is an expanded version of the framework proposed by Galì and Monacelli (2005) as well as Monacelli (2005). It is enriched with habit formation in consumption, price indexation, labor market imperfections, and several additional structural disturbances. The results show that - exactly as expected - the volatility of inflation is quite significantly lower under the price-level targeting regime, whereas the volatility of the output gap is markedly higher conditional on either productivity or preference shocks. Therefore, the introduction of a price-level targeting regime would likely produce an increase in the volatility of real economic activity conditional on both supply-side and demand-side shocks. Since inflation and output are targeted simultaneously, none of the two policies is strictly dominant.

Seller Inventory # 9783658082277

Title
Inflation versus Price-Level Targeting : Bayesian Estimation of a Small Open DSGE Model for Switzerland
Author
Lukas Heim
Publisher
Springer Fachmedien Wiesbaden, Springer Fachmedien Wiesbaden
Publication year
2014
Condition
Neu
Binding
Taschenbuch
Language
English
ISBN 10
3658082275
ISBN 13
9783658082277
Item weight
122 grams
Dimensions
210x148x6 mm

AHA-BUCH GmbH

Einbeck, Germany

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