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Greater Monetary Policy Transparency for the G3

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  • Mark R. Stone
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    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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    Bibliographic Info

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

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    Length: 27
    Date of creation: 01 Nov 2003
    Date of revision:
    Handle: RePEc:imf:imfwpa:03/218

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    Keywords: Inflation targeting; inflation; monetary policy; central bank; inflation target; price stability; monetary fund; financial stability; monetary economics; monetary framework; monetary policy framework; monetary policy transparency; monetary policy frameworks; foreign exchange; inflation targeting regime; monetary instruments; inflation rate; monetary regime; low inflation; inflation objective; nominal interest rates; monetary policy instruments; monetary policy regimes; inflation forecasts; rates of inflation; monetary policies; stable prices; price level; monetary control; monetary regimes; monetary policy rule; rate of inflation; inflation rates; macroeconomic stability; united states federal open market committee; monetary transmission; monetary policy decisions; monetary policy rules; monetary unit; expansionary monetary policies; monetary target; monetary policy regime; monetary authorities; actual rate of inflation; intermediate monetary target; inflation performance; discretionary monetary policy; monetary transmission mechanism; monetary stability; monetary aggregates;

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    Cited by:
    1. Carare, Alina & Stone, Mark R., 2006. "Inflation targeting regimes," European Economic Review, Elsevier, Elsevier, vol. 50(5), pages 1297-1315, July.

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