TY  - JOUR
AU  - Giannoni,Marc P.
AU  - Woodford,Michael
TI  - Optimal Inflation Targeting Rules
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9939
PY  - 2003
Y2  - September 2003
UR  - http://www.nber.org/papers/w9939
L1  - http://www.nber.org/papers/w9939.pdf
N1  - Author contact info:
Marc Giannoni
Federal Reserve Bank of New York
Macroeconomic & Monetary Studies Function
Research and Statistics Group
33 Liberty Street
New York, NY 10045-0001
Tel: 212-720-6518
Fax: 212-720-1844
E-Mail: mg2190@columbia.edu

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 Marc Giannoni, Michael Woodford. "Optimal Inflation-Targeting Rules ," in Ben S. Bernanke and Michael Woodford, editors, "The Inflation-Targeting Debate" University of Chicago Press (2005)

AB  - This paper characterizes optimal monetary policy for a range of alternative economic models in terms of a flexible inflation targeting rule, with a target criterion that depends on the model specification. It shows which forecast horizons should matter, and which variables besides inflation should be taken into account, for each specification. The likely quantitative significance of the various factors considered in the general discussion is then assessed by estimating a small, structural model of the U.S. monetary transmission mechanism with explicit optimizing foundations. An optimal policy rule is computed for the estimated model, and shown to correspond to a multi-stage inflation-forecast targeting procedure. The degree to which actual U.S. policy over the past two decades has conformed to the optimal target criteria is then considered.
ER  -