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Diane Publishing Books
What Difference Would an Inflation Target Make?: A Reprint from the Journal, “Economic Quarterly”
Robert L. Hetzel (au)
Critics of an explicit inflation target argue that it would require additional fluctuations in real output & unemployment. Author Robert L. Hetzel argues that theory & practice have shown this alleged dilemma to be a false one. However, an inflation target would demand more communication. The Federal Reserve would need to place an inflation target in the context of a policy rule that explains the strategy for achieving it. It would also need to communicate a model of the economy that clarifies the tradeoffs faced by monetary policymakers. Illustrations.
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