Inflation,Employment, and Monetary Policy: Objectives and Outcomes in the UK and U.S. Compared |
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Authors: | DAVID MILES |
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Abstract: | This paper explores how sensitive is monetary policy to the precise preferences of the central bank over inflation and economic activity. It does so in order to address a puzzle—which is that the U.S. Fed and the Bank of England appear to have quite different objectives and yet have adopted strikingly similar policies in recent years. I use a calibrated model to assess how policy might be sensitive to attaching different weights to inflation, output, and the output gap in central bank objectives. I find that a wide range of weights can give rise to rather similar monetary policies. |
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Keywords: | E5 E52 E61 monetary policy policy objectives inflation targets |
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