Is a price or inflation target best for stability?
A paper looking at the costs and benefits of price-level and inflation targeting as tools for stabilisation policy has been published by the Bank of Canada.
The research reviews recent literature that examines how price-level targeting affects the short-run trade-off between output and inflation variability by influencing expectations of future inflation, how price level targeting can help to avoid the zero-bound problem and how incentives created by price-level targeting change the degree of
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