The Effect of Discounting on Policy Choices in Inflation Targeting Regimes

Bibliographic Data

ID9703088
AuthorsSGB Henry (University of Kent), Mathan Satchi (University of Oxford), David Vines (Australian National University)
Year2006
Volume116
Issue508
Pages266-282
Publication date2006-01-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/j.1468-0297.2006.01056.x
OpenAlexW1999886712
LanguageEN
Citations received1
References cited18

This article assesses the implications of discounting on a result derived by Bean (1998): that in a model of monetary policy where policy acts with a lag, the outcomes of monetary policy are very similar for a wide range of preferences of the monetary authority with respect to inflation and output stability. We show that when the authority discounts the future, outcomes become more sensitive to its preferences, and that it is important to take the discount rate into account when examining the question of how the authority's remit should be specified. Copyright 2006 Royal Economic Society

Discounting · Dynamic inconsistency · Economics · Inflation (cosmology · Inflation targeting · Macroeconomics · Microeconomics · Monetary economics · Monetary policy · Economic Theory and Policy · Economic, financial, and policy analysis · Finance · Monetary Policy and Economic Impact

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