Steve Ambler


April 8, 2009

Price-Level Targeting and Stabilization Policy: A Review

This article reviews arguments in the literature for and against price-level targeting, focusing on its costs and benefits compared with inflation targeting. Benefits of price-level targeting include the effect on forward-looking inflation expectations; the ability to substitute for commitment by a central bank to its future policies; lessening forecast errors; better economic performance in response to real shocks because of lower wage indexation; and a reduction in the problem of the zero lower bound on nominal interest rates.
December 14, 2007

The Costs of Inflation in New Keynesian Models

Ambler describes three new channels through which inflation affects economic welfare in New Keynesian models. These channels were absent from traditional analyses and may have caused researchers to underestimate the costs associated with variable inflation, even at relatively low levels of inflation. The article concludes with a preliminary assessment of the quantitative importance of the new channels and their significance for monetary policy.

Price-Level Targeting and Stabilization Policy: A Review

Staff Discussion Paper 2007-11 Steve Ambler
The author surveys recent articles on the costs and benefits of price-level targeting versus inflation targeting, focusing on the benefits and costs of price-level targeting as a tool for stabilization policy. He reviews papers that examine how price-level targeting affects the short-run trade-off between output and inflation variability by influencing expectations of future inflation. The […]
Content Type(s): Staff Research, Staff Discussion Papers Topic(s): Monetary policy framework JEL Code(s): E, E3, E31, E32, E5, E52

Time-Consistent Control in Non-Linear Models

Staff Working Paper 2007-3 Steve Ambler, Florian Pelgrin
We show how to use optimal control theory to derive optimal time-consistent Markov-perfect government policies in nonlinear dynamic general equilibrium models, extending the result of Cohen and Michel (1988) for models with quadratic objective functions and linear dynamics. We replace private agents' costates by flexible functions of current states in the government's maximization problem.
Content Type(s): Staff Research, Staff Working Papers Topic(s): Fiscal Policy, Monetary policy framework JEL Code(s): C, C6, C63, E, E6, E61, E62

The Macroeconomic Effects of Non-Zero Trend Inflation

Staff Working Paper 2006-34 Robert Amano, Steve Ambler, Nooman Rebei
The authors study the macroeconomic effects of non-zero trend inflation in a simple dynamic stochastic general-equilibrium model with sticky prices.

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