An Investigation of Output Variance Before and During Inflation Targeting
Electronic Access:
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Summary:
Since Taylor estimated a trade-off between inflation and output variance, it has been widely accepted that efforts to keep the inflation rate “too low and stable” will likely result in relatively larger output fluctuations. Following the generalized reduction in inflation variance in the 1990s, that concern was rekindled. This study estimates whether conditional output variance has changed in a sample of 12 countries. With the possible exception of Canada, there is no evidence of an increase in output variance. Either output variance has not changed (i.e., in Korea and Singapore) or has fallen (i.e., in Australia and New Zealand).
Series:
Working Paper No. 2001/215
Subject:
Business cycles Economic growth Inflation Inflation targeting Monetary policy Monetary policy frameworks Potential output Prices Production
English
Publication Date:
December 1, 2001
ISBN/ISSN:
9781451875041/1018-5941
Stock No:
WPIEA2152001
Pages:
27
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