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Inflation Targeting

In: Handbook of Monetary Economics

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  • Svensson, Lars E.O.

Abstract

Inflation targeting is a monetary-policy strategy characterized by an announced numerical inflation target, an implementation of monetary policy that gives a major role to an inflation forecast that has been called forecast targeting, and a high degree of transparency and accountability. It was introduced in New Zealand in 1990, has been very successful in terms of stabilizing both inflation and the real economy, and as of 2010 has been adopted by about 25 industrialized and emerging-market economies. This chapter discusses the history, macroeconomic effects, theory, practice, and future of inflation targeting.

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This chapter was published in:

  • Benjamin M. Friedman & Michael Woodford (ed.), 2010. "Handbook of Monetary Economics," Handbook of Monetary Economics, Elsevier, edition 1, volume 3, number 3, January.
    This item is provided by Elsevier in its series Handbook of Monetary Economics with number 3-22.

    Handle: RePEc:eee:monchp:3-22

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    Related research

    Keywords: Flexible Inflation Targeting; Forecast Targeting; Optimal Monetary Policy; Transparency;

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    Cited by:
    1. Iulian Vasile Popescu, 2012. "Price-Level Targeting – A Viable Alternative To Inflation Targeting?," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4, pages 809-823, December.
    2. Juan Carlos Berganza & Carmen Broto, 2011. "Flexible inflation targets, forex interventions and exchange rate volatility in emerging countries," Banco de Espa�a Working Papers 1105, Banco de Espa�a.
    3. Ronny Mazzocchi, 2013. "Investment-Saving Imbalances with Endogenous Capital Stock," DEM Discussion Papers 2013/14, Department of Economics and Management.
    4. BIRMAN Andrei, 2012. "A VAR Analysis on the Monetary Policy Transmission Mechanism in Romania," European Journal of Interdisciplinary Studies, Bucharest Economic Academy, issue 01, March.
    5. Christophe Blot & Jérôme Creel & Paul Hubert & Fabien Labondance, 2014. "Dealing with the ECB's triple mandate ?," Sciences Po publications info:hdl:2441/53ccj34tat8, Sciences Po.
    6. Ali, Syed Zahid & Anwar, Sajid, 2013. "Inflation and interest rates in the presence of a cost channel, wealth effect and agent heterogeneity," Economic Modelling, Elsevier, vol. 31(C), pages 286-296.
    7. Rhee, Hyuk Jae & Turdaliev, Nurlan, 2013. "Central bank transparency: Does it matter?," International Review of Economics & Finance, Elsevier, vol. 27(C), pages 183-197.
    8. Juan Pablo Zárate Perdomo & Adolfo Léon Cobo Serna & Jose Eduardo Gómez González, 2012. "Lecciones de las crisis financieras recientes para el diseño e implementación de las políticas monetaria y financiera en Colombia," Borradores de Economia 708, Banco de la Republica de Colombia.
    9. Christophe Blot & Jérôme Creel & Paul Hubert & Fabien Labondance, 2014. "Les enjeux du triple mandant de la BCE," Sciences Po publications info:hdl:2441/5ijkqb693t9, Sciences Po.
    10. Jing Cynthia Wu & Kinda Hachem, 2013. "Inflation Announcements and Social Dynamics," 2013 Meeting Papers 238, Society for Economic Dynamics.
    11. Alessandro Flamini, 2012. "Interest Rate Forecasts in Inflation Targeting Open-Economies," DEM Working Papers Series 027, University of Pavia, Department of Economics and Management.
    12. Tiwari, Aviral Kumar & Mutascu, Mihai & Andries, Alin Marius, 2013. "Decomposing time-frequency relationship between producer price and consumer price indices in Romania through wavelet analysis," Economic Modelling, Elsevier, vol. 31(C), pages 151-159.
    13. Ronny Mazzocchi, 2013. "Intertemporal Coordination Failure and Monetary Policy," DEM Discussion Papers 2013/15, Department of Economics and Management.
    14. Kenneth N Kuttner & Ilhyock Shim, 2013. "Can non-interest rate policies stabilise housing markets? Evidence from a panel of 57 economies," BIS Working Papers 433, Bank for International Settlements.

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