Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/209871 
Year of Publication: 
2006
Series/Report no.: 
Working Paper No. 2006/8
Publisher: 
Norges Bank, Oslo
Abstract: 
We evaluate two main views on pursuing financial stability within a flexible inflation-targeting regime. It appears that potential gains from an activist or precautionary approach to promoting financial stability are highly shock dependent. We find support for the conventional view that concern for financial stability generally warrants a longer target horizon for inflation. The preferred target horizon depends on the financial stability indicator and the shock. An extension of the target horizon favoring financial stability may contribute to relatively higher variation in inflation and output.
Subjects: 
monetary policy
financial stability
JEL: 
C21
C52
C53
E47
E52
Persistent Identifier of the first edition: 
ISBN: 
82-7553-361-9
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
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