VoxEU is featuring work by Davide Debortoli (UPF and Barcelona GSE) and coauthors Jinill Kim (Korea University), Jesper Lindé (Sveriges Riksbank), and Ricardo Nunes (United States Federal Reserve Bank of Boston) in their article, "Why central banks should not be inflation nutters."
"Previous studies have suggested that for central banks, a focus on inflation stabilisation is enough to stabilise other macroeconomic variables, and that focusing on economic activity can even be harmful. Using a model similar to those in use at central banks, this column studies the welfare implications of increasing the weight on economic activity in the central bank’s objective. The results suggest that stabilising measures of economic activity should be one of the primary objectives of central banks, as important as or even more important than stabilising inflation around its target."
VoxEU is CEPR's policy portal for research-based policy analysis and commentary from leading economists. Many Barcelona GSE Affiliated Professors are contributors.
This work was also featured previously on the Barcelona GSE Focus: "Designing a Simple Loss Function for Central Banks: Does a Dual Mandate Make Sense?"
