Research on the Inflation Cost Evaluation and Appropriate Inflation Management Based on the Taylor Rule

DOI

10.2991/978-94-6463-054-1_60How to use a DOI?

Keywords

Real money balance; Menu cost; Price level target; Zero inflation target; Taylor rule

Abstract

Inflation has a number of negative effects, including the potential for reducing investment and slowing economic development due to volatility and uncertainty. Inflation can reduce an individual's savings value and shift the income away from savers to lenders and people with assets in society. When inflation reaches dangerously high levels, society can become unstable and people's faith in the economy might be lost. This paper evaluates the costs of inflation and how to manage inflation in an appropriate way by introducing the Taylor rule, a targeting monetary policy used by central banks to control inflation. According to the Taylor Rule, the Federal Reserve should raise rates when inflation exceeds the desired level or when GDP growth exceeds its potential.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Download article (PDF)

TY  - CONF
AU  - Shiqing Sheng
PY  - 2022
DA  - 2022/12/14
TI  - Research on the Inflation Cost Evaluation and Appropriate Inflation Management Based on the Taylor Rule
BT  - Proceedings of the 2022 2nd International Conference on Financial Management and Economic Transition (FMET 2022)
PB  - Atlantis Press
SP  - 558
EP  - 565
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-054-1_60
DO  - 10.2991/978-94-6463-054-1_60
ID  - Sheng2022
ER  -