A quantitative analysis of cost-push shocks and optimal inflation volatility

Date

2008-01-01

Author

Senay, Ozge
Sutherland, Alan

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This article presents a quantitative analysis of optimal inflation volatility in a simple sticky-price general equilibrium model subject to both supply and cost-push shocks. It is found that optimal policy implies a relatively small degree of inflation volatility even when cost-push shocks are the dominant source of economic disturbance. In addition, it is found that optimal policy generates only a very small welfare gain when compared to strict inflation targeting.

Subject Keywords

Economics and Econometrics

URI

https://hdl.handle.net/11511/65070

Journal

APPLIED ECONOMICS LETTERS

DOI

https://doi.org/10.1080/13504850600770954

Collections

Department of Economics, Article

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Citation Formats

O. Senay and A. Sutherland, “A quantitative analysis of cost-push shocks and optimal inflation volatility,” APPLIED ECONOMICS LETTERS, pp. 753–757, 2008, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/65070.