Inflation Targeting: A Critical Appraisal
AbstractSince the early 1990s, a number of countries have adopted Inflation Targeting (IT) in an effort to reduce inflation. Most literature has praised IT as a superior framework of monetary policy. We suggest that IT is a major policy prescription closely associated with the New Consensus Macroeconomics (NCM). Focusing mainly on the IT aspects of the NCM, we address and assess the theoretical foundations of IT, and then assess the empirical work on IT, distinguishing between work that utilizes structural macroeconomic models and work based on single- equation techniques. The IT theoretical framework and the available empirical evidence do not appear to support the views of IT proponents.
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Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0309015.
Length: 30 pages
Date of creation: 22 Sep 2003
Date of revision:
Note: Type of Document - word; prepared on PC; to print on HP/PostScript; pages: 30; figures: included
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monetary policy; infaltion targeting; interest rates; channels of monetary policy;
Other versions of this item:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
This paper has been announced in the following NEP Reports:
- NEP-CBA-2003-09-28 (Central Banking)
- NEP-LAM-2003-09-28 (Central & South America)
- NEP-MON-2003-09-28 (Monetary Economics)
- NEP-PKE-2003-09-28 (Post Keynesian Economics)
- NEP-RMG-2003-09-28 (Risk Management)
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