Inflation Targeting: Theory and Policy Implications
As with many monetary policy frameworks, inflation targeting is subject to the well-known problem of inflation bias. With inflation targeting, however, the bias becomes apparent not as inflation above desired levels but as a wedge between the announced target and observed inflation. This inconsistency could render the framework neither credible nor enforceable because the target is overshot on average. The problem can be addressed by assigning price stability as the single policy objective or by assigning dual targets for inflation and output, provided that they are consistent. Many inflation-targeting countries take the joint target approach implicitly through transparency measures that publicly assess monetary conditions in terms of potential output and output gaps.
Volume (Year): 43 (1996)
Issue (Month): 4 (December)
|Contact details of provider:|| Web page: http://www.palgrave-journals.com/|
|Order Information:||Web: http://www.springer.com/economics/journal/41308/PS2|
When requesting a correction, please mention this item's handle: RePEc:pal:imfstp:v:43:y:1996:i:4:p:779-795. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.