Negative Inflation Targeting: A Proposal of a Non-Distortionary Monetary Policy

@article{Frmmel2019NegativeIT,
  title={Negative Inflation Targeting: A Proposal of a Non-Distortionary Monetary Policy},
  author={Tom{\'a}{\vs} Fr{\"o}mmel},
  journal={Quarterly Journal of Austrian Economics},
  year={2019},
  volume={22},
  pages={336-356}
}
  • Tomáš Frömmel
  • Published 31 December 2019
  • Economics
  • Quarterly Journal of Austrian Economics
This paper aims to propose a non-distortionary monetary policy objective consistent with the Austrian business cycle theory. Since the price level should fall in the growing economy in the Hayekian framework, introduction of a negative inflation target combined with the Taylor rule is suggested as a non-distortionary monetary policy. To keep the money stream stable, the optimal inflation target would be equal to the opposite of the growth rate of the economy. Such policy should lead to the… 

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