The paper begins by tracing the origins of the case for inflation targeting in postwar US monetary history. It describes five aspects of inflation targeting practiced implicitly by the Greenspan Fed. It argues that (1) low long run inflation should be an explicit priority for monetary policy, (2) as a practical matter it is not desirable for the Fed to vary its short run inflation target (3) strict inflation targeting can be regarded as effcient constrained countercyclical stabilization policy. Finally, the paper suggests that the Fed publicly acknowledge its implicit priority for low long run inflation, that Congress recognize that priority, and that in return representatives of the FOMC consider participating in a monetary policy forum to better inform the public and congressional oversight committees about current monetary policy.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
9981.
Length: Date of creation: Sep 2003 Date of revision: Publication status: published relationship to a non-chapter. This should not happen. Please contact NBER. Handle: RePEc:nbr:nberwo:9981
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Find related papers by JEL classification: E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
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