The Case for a Long-Run Inflation Target of Four Percent

Author/Editor:

Laurence M. Ball

Publication Date:

June 9, 2014

Electronic Access:

Free Full text (PDF file size is 181 KB).Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Many central banks target an inflation rate near two percent. This essay argues that policymakers would do better to target four percent inflation. A four percent target would ease the constraints on monetary policy arising from the zero bound on interest rates, with the result that economic downturns would be less severe. This benefit would come at minimal cost, because four percent inflation does not harm an economy significantly.

Series:

Working Paper No. 14/92

Subject:

English

Publication Date:

June 9, 2014

ISBN/ISSN:

9781498395601/1018-5941

Stock No:

WPIEA2014092

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

21

Please address any questions about this title to publications@imf.org