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Greater Monetary Policy Transparency for the G3: Lessons from Full-Fledged Inflation Targeters

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Author Info
Mark R. Stone
Abstract

The experience of full-fledged inflation targeting (FFIT) countries is used here to shed light on the costs and benefits of greater monetary policy transparency for the G3. For the United States and the euro area, a hypothetical adoption of FFIT would incur a cost of less discretion while gaining the benefit of locking in a highly credible framework. The adoption of FFIT by Japan would create the risk of a further hit to credibility if policy was not able to end deflation. In practice, the G3 are already moving toward a new monetary regime that resembles FFIT in transparency, but not in accountability.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/218.

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Length: 26 pages
Date of creation: 18 Nov 2003
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Handle: RePEc:imf:imfwpa:03/218

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Keywords: Monetary policy ; United States ; Japan ; Euro area ; Transparency ; Inflation targeting ;

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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.:
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  4. Andrea Schaechter & Marc Zelmer, 2000. "Adopting Inflation Targeting: Practical Issues for Emerging Market Countries," IMF Occasional Papers 202, International Monetary Fund.
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  7. Gauti B. Eggertsson, 2003. "How to Fight Deflation in a Liquidity Trap: Committing to Being Irresponsible," IMF Working Papers 03/64, International Monetary Fund. [Downloadable!]
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Cited by:
(explanations, 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. Markus Hyvonen, 2004. "Inflation Convergence Across Countries," RBA Research Discussion Papers rdp2004-04, Reserve Bank of Australia. [Downloadable!]
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