What Do New Keynesian Phillips Curves Imply for Price Level Targeting?

Dittmar, Robert; Gavin, William T.

doi:10.20955/wp.1999.021

Cited by 31 publications

(25 citation statements)

References 17 publications

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“…These results have been extended by Clarida et al (1999) and Dittmar and Gavin (2000) to the case of a New Keynesian Phillips curve derived from overlapping contracts, as in Calvo (1983),…”

Section: Alternative Feedback Rulesmentioning

confidence: 82%

Interest Rate Feedback Rules in an Open Economy with Forward Looking Inflation

Leith

Wren‐Lewis

2001

Oxf Bull Econ Stat

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With the adoption of an explicit inflation target in the UK, there has been renewed interest in the properties of alternative interest rate feedback rules. Following Svensson (1999) a literature examining the relative merits of inflation and price level targeting has also developed. In this paper we compare the stabilization properties of the two forms of feedback rule that have been used most frequently in the literature and which give rise to price level and inflation targeting, respectively. The model in which we embed our rules is significantly richer than those considered in the price level targeting literature and this allows us to explain why the relative performance of the rules is dependent upon the nature of the shock considered and whether or not excess inflation is defined in terms of consumer or output price inflation.

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“…These results have been extended by Clarida et al (1999) and Dittmar and Gavin (2000) to the case of a New Keynesian Phillips curve derived from overlapping contracts, as in Calvo (1983),…”

Section: Alternative Feedback Rulesmentioning

confidence: 82%

Interest Rate Feedback Rules in an Open Economy with Forward Looking Inflation

Leith

Wren‐Lewis

2001

Oxf Bull Econ Stat

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show abstract

“…1 p.108. 2 Dittmar and Gavin (2000) compare and contrast the output-inflation variability trade-off in models featuring variants of the expectations-augmented and the New Keynesian Phillips Curves. According to their findings, the degree of persistence of real output in the Phillips Curve does not matter in the assessment of the output-inflation variability tradeoff under price level targeting as opposed to inflation targeting in the New Keynesian model.…”

mentioning

confidence: 99%

Price stability through price-level targeting or inflation targeting? A tale of two experiments

Guender

2006

Journal of Economics and Business

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“…not have found such a favorable result for price-level rules. Dittmar and Gavin (1999) show that this is not the case. They show that using the New Keynesian Phillips Curve actually strengthens the case for price-level targeting relative to the Neoclassical specification.…”

Section: An Error-correction Rule With a Long-term Price Objectivementioning

confidence: 92%

“…technology shock with mean zero and variance σ 2 ε . We used this model in Dittmar et al (1999) to challenge an assumption often made by those who analyze monetary policy in a Phillips Curve framework. The assumption is that price-level targeting would cause large output variability.…”

Section: Inflation Targets and The Phillips Curvementioning

confidence: 99%