Richmond Fed's Economic Quarterly Analyzes the Effects of a Higher Inflation Rate Target

(firmenpresse) - RICHMOND, VA -- (Marketwire) -- 10/13/11 -- Bennett T. McCallum of Carnegie Mellon University and the National Bureau of Economic Research and a visiting scholar at the Richmond Fed discusses whether central banks should set higher inflation targets, such as 4 percent rather than 2 percent. Some economists have argued that because providing monetary stimulus when interest rates are at the zero lower bound is more difficult, central banks should consider increasing their inflation rate targets. McCallum notes that the benefits of providing additional monetary stimulus at the zero lower bound must be weighed against the costs of maintaining higher inflation outside of that scenario. To make that comparison, he explores pertinent research and theory, including Milton Friedman's "optimal quantity of money" result, New Keynesian literature on resource misallocation caused by price stickiness that affects only some sellers, and the contention that the zero lower bound does not necessarily constitute a limit to monetary stimulus.

You can find the full text of this article and others in the latest issue of Economic Quarterly at: .

Also in the Second Quarter 2011 issue:

by Borys Grochulski

by Nadezhda Malysheva and Pierre-Daniel G. Sarte

by Juan Carlos Hatchondo and Leonardo Martinez

The Economic Quarterly is a free publication containing economic analysis pertinent to Federal Reserve monetary and banking policy. For free copies or more information, contact the Federal Reserve Bank of Richmond's Research Department -- Publications at 800.322.0565 or visit .





Contacts:
John Weinberg
Director of Research
Federal Reserve Bank of Richmond
804.697.8205

Amanda Kramer
Managing Editor
Federal Reserve Bank of Richmond Economic Quarterly

804.697.8606

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Bereitgestellt von Benutzer: MARKET WIRE
Datum: 13.10.2011 - 13:14 Uhr
Sprache: Deutsch
News-ID 75865
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