“Make-up” strategies may boost monetary policy, says paper
Price-level and average inflation targeting regimes stabilise import-related inflation, researchers find
Some monetary policy strategies work better than targeting a certain level of inflation, a working paper published by the Bank of Italy finds.
In Make-up strategies and exchange rate pass-through in a low-interest-rate environment, Alessandro Cantelmo, Pietro Cova, Alessandro Notarpietro and Massimiliano Pisani examine three strategies. The authors look at two “make-up strategies” – price-level targeting and average inflation targeting – and compare these to inflation targeting.
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