TY  - JOUR
AU  - Svensson,Lars E.O.
TI  - Does the P* Model Provide Any Rationale for Monetary Targeting?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7178
PY  - 2000
Y2  - June 2000
UR  - http://www.nber.org/papers/w7178
L1  - http://www.nber.org/papers/w7178.pdf
N1  - Author contact info:
Lars E.O. Svensson
Sveriges Riksbank
SE-103 37 Stockholm
SWEDEN
Tel: +46 8 787 0107
Fax: +46 8 21 0531
E-Mail: lars.svensson@iies.su.se
AB  - The so-called P* model is frequently used or referred to in discussions of monetary targeting. This gives the impression that the P* model might provide some rationale for monetary targeting or for the monetary reference value used by the Eurosystem. The P* model implies that inflation is determined by the level of and changes in the 'money gap' (the deviation of current real balances from their long-run equilibrium level), and hence that the real money gap is an important indicator for future inflation. Nevertheless, the P* model does not seem to provide any rationale for either a Bundesbank-style money-growth target or a Eurosystem-style money-growth indicator.
ER  -