Central bank independence and inflation targeting: monetary policy paradigms for the next millenium?
AbstractAn expanding body of literature holds two truths about monetary policy to be self-evident: Effective central banks must be independent from undue political interference, and they would do well to target the rate of inflation directly. The genesis of this literature may be found in the concern about the effective use of the significant power wielded by central banks around the world, and in the response to a pivotal and turbulent period in economic history. The marked rise in the level and variability of inflation following the oil price surges of the 1970s led many to question the Fed's and other central banks' commitment to a low and stable inflation rate.> This article takes a critical look at the theory of inherent inflationary bias and the proposed solutions to the bias, focusing particularly on mechanisms for ensuring central bank independence and on inflation targeting. It then examines the robustness of the empirical results that are often used to support the validity of the solutions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Federal Reserve Bank of Boston in its journal New England Economic Review.
Volume (Year): (1997)
Issue (Month): Jan ()
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Hielscher, Kai & Markwardt, Gunther, 2012.
"The role of political institutions for the effectiveness of central bank independence,"
European Journal of Political Economy,
Elsevier, vol. 28(3), pages 286-301.
- Kai Hielscher & Gunther Markwardt, 2011. "The Role of Political Institutions for the Effectiveness of Central Bank Independence," CESifo Working Paper Series 3396, CESifo Group Munich.
- Joe Peek & Eric S. Rosengren & Geoffrey M. B. Tootell, 1999.
"Is bank supervision central to central banking?,"
99-7, Federal Reserve Bank of Boston.
- Stefan Krause & Fabio Mendez, 2005.
"Institutions, Arrangements, and Preferences for Inflation Stability: Evidence and Lessons from a Panel Data Analysis,"
0501, Department of Economics, Emory University (Atlanta).
- Krause, Stefan & Méndez, Fabio, 2008. "Institutions, arrangements and preferences for inflation stability: Evidence and lessons from a panel data analysis," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 282-307, March.
- Willem Thorbecke, 2002.
"A Dual Mandate for the Federal Reserve: The Pursuit of Price Stability and Full Employment,"
Eastern Economic Journal,
Eastern Economic Association, vol. 28(2), pages 255-268, Spring.
- Willem Thorbecke, . "A Dual Mandate for the Federal Reserve, The Pursuit of Price Stability and Full Employment," Economics Public Policy Brief Archive ppb_60, Levy Economics Institute.
- Posso, Alberto & Tawadros, George B., 2013. "Does greater central bank independence really lead to lower inflation? Evidence from panel data," Economic Modelling, Elsevier, vol. 33(C), pages 244-247.
- Jörg Bibow, 2001. "Reflections on the Current Fashion For Central Bank Independence," Macroeconomics 0108004, EconWPA.
- van Bergeijk, Peter A. G. & Berk, Jan Marc, 2000. "Is the yield curve a useful Information variable for the Eurosystem?," Working Paper Series 0011, European Central Bank.
- St-Amant, Pierre & Tessier, David, 1998.
"Résultats empiriques multi-pays relatifs à l'impact des cibles d'inflation sur la crédibilité de la politique monétaire,"
98-23, Bank of Canada.
- Pierre St-Amant & David Tessier, 2000. "Résultats empiriques multi-pays relatifs à l'impact des cibles d'inflation sur la crédibilité de la politique monétaire," Canadian Public Policy, University of Toronto Press, vol. 26(3), pages 295-310, September.
- Joe Peek & Eric S. Rosengren & Geoffrey M.B. Tootell, 1997. "Is banking supervision central to central banking?," Working Papers 97-3, Federal Reserve Bank of Boston.
- Jens Klose, 2012.
"Political business cycles and monetary policy revisited–an application of a two-dimensional asymmetric Taylor reaction function,"
International Economics and Economic Policy,
Springer, vol. 9(3), pages 265-295, September.
- Jens Klose, 2011. "Political Business Cycles and Monetary Policy Revisited – An Application of a Two-Dimensional Asymmetric Taylor Reaction Function," Ruhr Economic Papers 0286, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Catherine Spozio).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.