In Search of a Nominal Anchor
Since the break-up of the Bretton Woods fixed exchange rate system in the early-1970s, there has been a protracted search for a credible nominal anchor. This article examines the experiences of several industrial countries who have experimented with monetary targets, exchange rate targets and more recently, inflation targets. While it is acknowledged that the results of inflation targeting have been very encouraging so far, the article concludes by arguing that for the UK at least, inflation targets need to be combined with targets for the monetary base to prevent the central bank from acting dynamically inconsistently.
Volume (Year): 6 (2001)
Issue (Month): 1 (March)
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