TY - BOOK ID - 14278029 TI - Inflation Targeting Under Imperfect Policy Credibility. PY - 2009 SN - 1462323480 1451872410 9786612843143 1452772274 1282843141 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Inflation (Finance) KW - Fiscal policy. KW - Tax policy KW - Taxation KW - Economic policy KW - Finance, Public KW - Finance KW - Natural rate of unemployment KW - Government policy KW - Inflation KW - Money and Monetary Policy KW - Economic Theory KW - Production and Operations Management KW - Price Level KW - Deflation KW - Monetary Policy KW - Macroeconomics: Production KW - Agriculture: Aggregate Supply and Demand Analysis KW - Prices KW - Macroeconomics KW - Monetary economics KW - Economic theory & philosophy KW - Inflation targeting KW - Output gap KW - Supply shocks KW - Disinflation KW - Monetary policy KW - Production KW - Economic theory KW - Supply and demand KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:14278029 AB - This paper presents a model for Inflation Targeting under imperfect policy credibility. It modifies the conventional model in three ways: an endogenous policy credibility process, by which monetary policy can gain or lose credibility over time; non-linearities in the inflation equation and in the credibility generating process; and an explicit loss function. The model highlights problems associated with the practice of setting a series of rigid near-term inflation targets. Also, unfavorable supply shocks pose a difficult problem: an appropriate response involves an interest rate increase, some loss of output, and a period of increased inflation. A delayed response can result in a prolonged period of stagflation. ER -