Fredrik N G Andersson
Associate professor
How Tolerant Should Inflation-Targeting Central Banks Be? Selecting the Proper Tolerance Band : Lessons from Sweden
Author
Summary, in English
Should an inflation-targeting central bank have an explicit tolerance band around its inflation target? This paper provides an answer derived from the Swedish experience. The Riksbank is exceptional in the sense that it first adopted and later abolished an explicit band and is currently considering bringing it back. We conclude that the band should be explicit for several reasons. Most important, an inflation-targeting central bank should be open and transparent to the public regarding its actual ability to control inflation. We discuss how a numerical measure of the proper width of the band can be constructed to foster communication and credibility.
Department/s
- Department of Economics
Publishing year
2017-02-13
Language
English
Publication/Series
Working Papers
Volume
2017
Issue
2
Links
Document type
Working paper
Publisher
Department of Economics, Lund University
Topic
- Economics
Keywords
- inflation target
- monetary policy
- tolerance band
- riksbank
- Sweden
- inflation targeting
- tolerance band
- tolerance interval
- monetary policy
- the Riksbank
- Sweden
- E30
- E31
- E58.
Status
Published