How the P * Model Rationalises Monetary Targeting - A Comment on Svensson
نویسنده
چکیده
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 rationalised 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. # This paper reflects our personal views, not necessarily those of the Deutsche Bundesbank. We thank Jörg Clostermann and Stefan Kuhnert for helpful comments. All remaining errors are ours, of course. 1 How the P* Model Rationalises Monetary Targeting A Comment on Svensson
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Model Rationalises Monetary Targeting— a Comment on Svensson "
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