Template-Type: ReDIF-Paper 1.0

Author-Name: Nicolas Pinkwart
Author-X-Name-First: Nicolas 
Author-X-Name-Last: Pinkwart


Title: Uncertainty About the Persistence of Inflation

	
Abstract: This paper offers several contributions to actual research and discussion on monetary policy. It clarifies the relationship between uncertainty of inflation persistence and optimal monetary policy and discusses the consequences of the recent Blanchard proposal to implement a higher inflation target in the light of parameter uncertainty. Furthermore, it provides insights of general interest on the methodological level by analyzing the interrelations between normalization of variables and their independence properties and by extending standard solution methods of dynamic programming problems to non-orthogonal parameter uncertainty.
Length:  26 pages
Creation-Date:  2010-04
File-URL: http://www.bgpe.de/texte/DP/091_pinkwart.pdf
File-Format: Application/pdf
File-Function: First version, 2010
Number: 091
Classification-JEL: E52, E58, C61
Keywords: Inflation Persistence, Parameter Uncertainty, Inflation Target, Dynamic Programming
Handle: RePEc:bav:wpaper:091_pinkwart