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'The Meaning of Internal Balance' Thirty Years On


  • Charles Bean


In his Nobel Prize lecture, Meade advocated allocating demand management policies to pursuing price stability, reformed wage-fixing institutions to achieving full employment and foreign exchange policies to maintaining balance-of-payments equilibrium. But with respect to the first, he advocated a target for nominal income rather than the price level. I evaluate Meade's programme with the benefit of hindsight and in the light of experience with inflation targets. I also discuss some of the issues associated with the application of flexible inflation targets, as well as the extent to which financial stability considerations should affect the conduct of monetary policy. Copyright © Bank of England. Journal compilation © Royal Economic Society 2009.

Suggested Citation

  • Charles Bean, 2009. "'The Meaning of Internal Balance' Thirty Years On," Economic Journal, Royal Economic Society, vol. 119(541), pages 442-460, November.
  • Handle: RePEc:ecj:econjl:v:119:y:2009:i:541:p:f442-f460

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    References listed on IDEAS

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    Cited by:

    1. Seppo Honkapohja, 2016. "Monetary policies to counter the zero interest rate: an overview of research," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(2), pages 235-256, May.
    2. Seppo Honkapohja & Kaushik Mitra, 2015. "Comparing Inflation and Price-Level Targeting: The Role of Forward Guidance and Transparency," Manchester School, University of Manchester, vol. 83, pages 27-59, December.
    3. Mitra, Kaushik & Honkapohja, Seppo, 2014. "Targeting nominal GDP or prices: : Guidance and expectation dynamics," Research Discussion Papers 4/2014, Bank of Finland.

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