Paradox of stationarity? A policy target dilemma for policymakers

This brief paper sets out an underappreciated practically oriented paradox and its methodological implications. The paradox is highly relevant to central banks and any organization or agent that seeks to match or anticipate central bank policy, such as other actors in banking and finance. Specifically, there is a divergence between the statistical requirement of stationarity and any macroeconomic policy objective that involves a target that...