TY  - JOUR
AU  - Svensson,Lars E. O.
AU  - Woodford,Michael
TI  - Implementing Optimal Policy through Inflation-Forecast Targeting
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9747
PY  - 2003
Y2  - June 2003
UR  - http://www.nber.org/papers/w9747
L1  - http://www.nber.org/papers/w9747.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

Michael Woodford
Department of Economics
Columbia University
420 W. 118th Street
New York, NY 10027
Tel: 212/854-1094
Fax: 212-854-8059
E-Mail: mw2230@columbia.edu
M1  - published as Lars E.O. Svensson, Michael Woodford. "Implementing Optimal Policy through Inflation-Forecast Targeting," in Ben S. Bernanke and Michael Woodford, editors, "The Inflation-Targeting Debate" University of Chicago Press (2005)

AB  - We examine to what extent variants of inflation-forecast targeting can avoid stabilization bias, incorporate history-dependence, and achieve determinancy of equilibrium, so as to reproduce a socially optimal equilibrium. We also evaluate these variants in terms of the transparency of the connection with the ultimate policy goals and the robustness to model perturbations. A suitably designed inflation-forecast targeting rule can achieve the social optimum and at the same time have a more transparent connection to policy goals and be more robust than competing instrument rules.
ER  -