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Inflation targeting: lessons from four countries

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  • Frederic S. Mishkin
  • Adam S. Posen

Abstract

In recent years, a number of central banks have chosen to orient their monetary policy toward the achievement of numerical inflation targets. This study examines the experience of the first three countries to adopt an inflation-targeting strategy--New Zealand, Canada, and the United Kingdom. It also considers the German experience with a monetary targeting scheme that incorporated many elements of inflation targeting even earlier. The authors find that the countries adopting a numerical inflation target have successfully maintained low inflation rates. Other benefits of inflation targeting include increased central bank accountability, heightened public understanding of monetary policy, and an improved climate for economic growth.

Suggested Citation

  • Frederic S. Mishkin & Adam S. Posen, 1997. "Inflation targeting: lessons from four countries," Economic Policy Review, Federal Reserve Bank of New York, vol. 3(Aug), pages 9-110.
  • Handle: RePEc:fip:fednep:y:1997:i:aug:p:9-110:n:v.3no.3
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    More about this item

    Keywords

    Monetary policy - Germany; Monetary policy - Great Britain; Inflation (Finance); Monetary policy - Canada; Monetary policy - New Zealand;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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