Inflation targets and the benefits of an explicit tolerance band
(2017)- Abstract
- Inflation-targeting central banks commonly fail to hit their official inflation targets, so targets are combined with a tolerance band which is either implicit or explicit. Taking the Swedish Riksbank as an example, this column argues that adopting an explicit tolerance band would better communicate to the public the central bank’s lack of full control over the rate of inflation and thus foster public confidence in monetary policy, and it would also increase the central bank’s ability to stabilise the economy. The width of the band can be derived from the historical inflation outcome.
- Abstract (Swedish)
- Inflation-targeting central banks commonly fail to hit their official inflation targets, so targets are combined with a tolerance band which is either implicit or explicit. Taking the Swedish Riksbank as an example, this column argues that adopting an explicit tolerance band would better communicate to the public the central bank’s lack of full control over the rate of inflation and thus foster public confidence in monetary policy, and it would also increase the central bank’s ability to stabilise the economy. The width of the band can be derived from the historical inflation outcome.
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/580b4d72-4374-45bb-9cb0-14a73d863f84
- author
- Andersson, Fredrik N G LU and Jonung, Lars LU
- organization
- publishing date
- 2017-05-08
- type
- Other contribution
- publication status
- published
- subject
- keywords
- central banks, inflation, inflation targeting, monetary policy, EU, eurozone, price stability
- publisher
- voxeu.org
- language
- English
- LU publication?
- yes
- id
- 580b4d72-4374-45bb-9cb0-14a73d863f84
- alternative location
- http://voxeu.org/article/inflation-targets-and-benefits-explicit-tolerance-ban
- date added to LUP
- 2017-05-08 09:40:46
- date last changed
- 2020-02-04 13:26:19
@misc{580b4d72-4374-45bb-9cb0-14a73d863f84, abstract = {{Inflation-targeting central banks commonly fail to hit their official inflation targets, so targets are combined with a tolerance band which is either implicit or explicit. Taking the Swedish Riksbank as an example, this column argues that adopting an explicit tolerance band would better communicate to the public the central bank’s lack of full control over the rate of inflation and thus foster public confidence in monetary policy, and it would also increase the central bank’s ability to stabilise the economy. The width of the band can be derived from the historical inflation outcome.}}, author = {{Andersson, Fredrik N G and Jonung, Lars}}, keywords = {{central banks; inflation; inflation targeting; monetary policy; EU; eurozone; price stability}}, language = {{eng}}, month = {{05}}, publisher = {{voxeu.org}}, title = {{Inflation targets and the benefits of an explicit tolerance band}}, url = {{http://voxeu.org/article/inflation-targets-and-benefits-explicit-tolerance-ban}}, year = {{2017}}, }