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- Title
CREDIT RATIONING AND INVESTMENT: INFLATION VERSUS INTEREST RATE TARGETING.
- Authors
Elwood, S. Kirk; Fields, T. Windsor
- Abstract
This paper compares the effect of credit rationing on aggregate investment under two types of monetary regimes: inflation targeting and interest rate targeting. Inflation targeting has been adopted by many central banks over the past two decades while interest rate targeting has remained the approach of the US Federal Reserve Bank. A simple model is presented that demonstrates that the effects of credit rationing on aggregate investment are more severe under a policy of interest rate targeting than under a policy of inflation targeting.
- Subjects
CREDIT; FINANCE; MONEY; RATIONING; ECONOMIC policy; PRICE inflation; INTEREST rates
- Publication
Virginia Social Science Journal, 2009, Vol 44, p55
- ISSN
0507-1305
- Publication type
Article