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- Title
How the P * Model Rationalizes Monetary Targeting: A Comment on Svensson.
- Authors
Seitz, Franz; Tödter, Karl-Heinz
- Abstract
In this comment, we answer the question posed in Svensson’s (2000) paper ‘Does the P * Model Provide any Rationale for Monetary Targeting?’ – in contrast to him -- in the affirmative. We argue that a strategy of monetary targeting can be rationalized within the P * framework. Furthermore, we demonstrate that money growth targeting is a special form of inflation forecast targeting based on a ‘limited’ information set. In contrast to ‘full information’ inflation forecast targeting, monetary growth targeting is likely to be more robust under changing conditions of the real world.
- Subjects
MATHEMATICAL models of monetary policy; PRICE inflation; FORECASTING
- Publication
German Economic Review, 2001, Vol 2, Issue 3
- ISSN
1465-6485
- Publication type
Article
- DOI
10.1111/1468-0475.00040