Optimal Monetary Policy in a Model with Habit Formation

  title={Optimal Monetary Policy in a Model with Habit Formation},
  author={Jeffrey C. Fuhrer},
A numberof recentpapershave exploredmonetarypolicy options,including inflationtargetingandinflation forecasttargeting(notablySvensson(1999a,1999b, 2000))andprice level targeting(Wolman2000,Batini andYates1999,Blinder 1999). Most papersexplore“optimal” monetarypolicy in thecontext of a single model.However, a numberof conclusionsmadein theliteraturedependstrongly on themodelspecificationused.In addition,mostpapershave usedtheefficient policy frontier conceptto defineoptimal monetarypolicy. This… CONTINUE READING

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