Welfare Effects of Price Targeting on Fixed Income Earners in Nigeria: A Framework for Analysis

The paper examines the welfare implications of price targeting from the perspective of when central bank has credibility of persistently achieving the target rates and when people have lost confidence on such credibility. In the former, it was observed that the principle of Pareto optimality holds while there will be welfare loss and social bliss denied in case of the later. The paper thus recommends a cautions monetary policy from the monetary targetters that will not affect the goal of ensuring maximum welfare and social justice in the society.