The Case for a Long-Run Inflation Target of Four Percent
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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. 2014/092
Subject:
Banking Financial services Inflation Inflation targeting Monetary policy Prices Real interest rates Zero lower bound
English
Publication Date:
June 9, 2014
ISBN/ISSN:
9781498395601/1018-5941
Stock No:
WPIEA2014092
Pages:
21
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