Inflation versus Price-Level Targeting: Bayesian Estimation of a Small Open DSGE Model for Switzerland
Lukas Heim evaluates the performance of a price-level targeting rule compared to that of a standard inflation targeting rule. The comparison is based on a medium-scale DSGE model which has been estimated based on state-of-the-art Bayesian methods. The model for the Swiss economy is an expanded versi...
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oai:scholar.dlu.edu.vn:DLU123456789-593372023-11-11T06:35:46Z Inflation versus Price-Level Targeting: Bayesian Estimation of a Small Open DSGE Model for Switzerland Heim, Lukas Inflation targeting Econometric models Prices Monetary policy Lukas Heim evaluates the performance of a price-level targeting rule compared to that of a standard inflation targeting rule. The comparison is based on a medium-scale DSGE model which has been estimated based on state-of-the-art Bayesian methods. The model for the Swiss economy is an expanded version of the framework proposed by Galì and Monacelli (2005) as well as Monacelli (2005). It is enriched with habit formation in consumption, price indexation, labor market imperfections, and several additional structural disturbances. The results show that – exactly as expected – the volatility of inflation is quite significantly lower under the price-level targeting regime, whereas the volatility of the output gap is markedly higher conditional on either productivity or preference shocks. Therefore, the introduction of a price-level targeting regime would likely produce an increase in the volatility of real economic activity conditional on both supply-side and demand-side shocks. Since inflation and output are targeted simultaneously, none of the two policies is strictly dominant. 2015-12-07T07:25:54Z 2015-12-07T07:25:54Z 2015 Book 978-3-658-08228-4 978-3-658-08227-7 https://scholar.dlu.edu.vn/thuvienso/handle/DLU123456789/59337 en application/pdf Springer |
| institution |
Thư viện Trường Đại học Đà Lạt |
| collection |
Thư viện số |
| language |
English |
| topic |
Inflation targeting Econometric models Prices Monetary policy |
| spellingShingle |
Inflation targeting Econometric models Prices Monetary policy Heim, Lukas Inflation versus Price-Level Targeting: Bayesian Estimation of a Small Open DSGE Model for Switzerland |
| description |
Lukas Heim evaluates the performance of a price-level targeting rule compared to that of a standard inflation targeting rule. The comparison is based on a medium-scale DSGE model which has been estimated based on state-of-the-art Bayesian methods. The model for the Swiss economy is an expanded version of the framework proposed by Galì and Monacelli (2005) as well as Monacelli (2005). It is enriched with habit formation in consumption, price indexation, labor market imperfections, and several additional structural disturbances. The results show that – exactly as expected – the volatility of inflation is quite significantly lower under the price-level targeting regime, whereas the volatility of the output gap is markedly higher conditional on either productivity or preference shocks. Therefore, the introduction of a price-level targeting regime would likely produce an increase in the volatility of real economic activity conditional on both supply-side and demand-side shocks. Since inflation and output are targeted simultaneously, none of the two policies is strictly dominant. |
| format |
Book |
| author |
Heim, Lukas |
| author_facet |
Heim, Lukas |
| author_sort |
Heim, Lukas |
| title |
Inflation versus Price-Level Targeting:
Bayesian Estimation of a Small Open DSGE Model for Switzerland |
| title_short |
Inflation versus Price-Level Targeting:
Bayesian Estimation of a Small Open DSGE Model for Switzerland |
| title_full |
Inflation versus Price-Level Targeting:
Bayesian Estimation of a Small Open DSGE Model for Switzerland |
| title_fullStr |
Inflation versus Price-Level Targeting:
Bayesian Estimation of a Small Open DSGE Model for Switzerland |
| title_full_unstemmed |
Inflation versus Price-Level Targeting:
Bayesian Estimation of a Small Open DSGE Model for Switzerland |
| title_sort |
inflation versus price-level targeting:
bayesian estimation of a small open dsge model for switzerland |
| publisher |
Springer |
| publishDate |
2015 |
| url |
https://scholar.dlu.edu.vn/thuvienso/handle/DLU123456789/59337 |
| _version_ |
1819845943778869248 |