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Inflation targets and inflation targeting

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Author Info
Laurence H. Meyer
Abstract

The Federal Reserve currently has a dual mandate: promote price stability and full employment. In a speech presented at the University of California at San Diego Economic Roundtable, Laurence Meyer explores two policy options that would change the current framework. Meyer discusses whether the United States should (i) move to an inflation-targeting regime (placing primary emphasis on price stability) or (ii) set an explicit numerical target for inflation within the context of the current dual mandate.> For background, he describes an inflationtargeting regime, reviews various mandates> around the world, and discusses common elements and differences among the regimes.> He then explores each option. Because the first option may reduce the flexibility of monetary policy too stringently, it is determined to be undesirable. The second option would, in the author’s opinion, give added precision to an already mandated objective because it would improve transparency and accountability of the Fed, anchor inflation expectations and increase the Fed’s credibility, and institutionalize good monetary policy. The steps necessary to implement the preferred option are outlined.

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Article provided by Federal Reserve Bank of St. Louis in its journal Review.

Volume (Year): (2001)
Issue (Month): Nov. ()
Pages: 1-14
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Handle: RePEc:fip:fedlrv:y:2001:i:nov.:p:1-14:n:v.83no.6

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Keywords: Inflation (Finance) ; Monetary policy;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Stephen G. Cecchetti & Michael Ehrmann, 1999. "Does Inflation Targeting Increase Output Volatility? An International Comparison of Policymakers' Preferences and Outcomes," NBER Working Papers 7426, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Stanley Fischer, 1996. "Why are central banks pursuing long-run price stability?," Proceedings, Federal Reserve Bank of Kansas City, pages 7-34. [Downloadable!]
  3. George A. Akerlof & William R. Dickens & George L. Perry, 1996. "The Macroeconomics of Low Inflation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1996-1), pages 1-76. [Downloadable!]
  4. Andrew Levin & Volker Wieland & John C. Williams, 1998. "Robustness of simple monetary policy rules under model uncertainty," Finance and Economics Discussion Series 1998-45, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
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  5. Lars E.O. Svensson, 1999. "How should monetary policy be conducted in an era of price stability?," Proceedings, Federal Reserve Bank of Kansas City, pages 195-259. [Downloadable!]
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  6. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December. [Downloadable!] (restricted)
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  1. Baltensperger, Ernst & Fischer, Andreas M & Jordan, Thomas J., 2006. "Strong Goal Independence and Inflation Targets," CEPR Discussion Papers 5915, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Lars E.O Svensson, 2002. "Monetary policy and real stabilization," Proceedings, Federal Reserve Bank of Kansas City, pages 261-312. [Downloadable!]
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  3. Vittorio Corbo, 2002. "Exchange Rate Regimes in the Americas: Is Dollarization the Solution?," Documentos de Trabajo 229, Instituto de Economía. Pontificia Universidad Católica de Chile.. [Downloadable!]
  4. Øistein RØisland & Ragnar Torvik, 2003. "Optimum Currency Areas Under Inflation Targeting," Open Economies Review, Springer, vol. 14(2), pages 99-118, April. [Downloadable!] (restricted)
  5. Philip Arestis, Malcolm Sawyer, 2003. "Inflation Targeting: A Critical Appraisal," Economics Working Paper Archive 388, Levy Economics Institute, The. [Downloadable!]
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  6. Charles Frederick Kramer & Mark R. Stone, 2005. "A Post-Reflation Monetary Framework for Japan," IMF Working Papers 05/73, International Monetary Fund. [Downloadable!]
  7. Oscar Landerretche & Vittorio Corbo & Klaus Schmidt-Hebbel, 2001. "Does Inflation Targeting Make a Difference," Working Papers Central Bank of Chile 106, Central Bank of Chile. [Downloadable!]
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  8. António Portugal Duarte, 2005. "The Portuguese Disinflation Process: Analysis of Some Costs and Benefits," International Finance 0504005, EconWPA. [Downloadable!]
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