Should monetary policy stabilise resource utilisation? Economic Commentaries, No. 1, 2008 - Sveriges Riksbank

Should monetary policy stabilise resource utilisation?
Magnus Jonsson, Christian Nilsson and Stefan Palmqvist
The authors work in the Monetary Policy Department.

Flexible inflation targeting implies that monetary policy stabilises inflation around a target. In addition, consideration is given to real economic activity. According to the new Keynesian theory, monetary policy should achieve an efficient resource utilisation, which is not necessarily the same as a stable resource utilisation.