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Alan Greenspan, The Confidence Strategy

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  • Edwin Le Héron

    (CERVL - Pouvoir, Action publique, Territoire - Institut d'Études Politiques [IEP] - Bordeaux - CNRS - Centre National de la Recherche Scientifique)

Abstract

To evaluate the Greenspan era, we nevertheless need to address three questions: Is his success due to talent or just luck? Does he have a system of monetary policy or is he himself the system? What will be his legacy? Greenspan was certainly lucky, but he was also clairvoyant. Above all, he has developed a profoundly original monetary policy. His confidence strategy is clearly opposed to the credibility strategy developed in central banks and the academic milieu after 1980, but also inflation targeting, which today constitutes the mainstream monetary policy regime. The question of his legacy seems more nuanced. However, Greenspan will remain 'for a considerable period of time' a highly heterodox and original central banker. His political vision, his perception of an uncertain world, his pragmatism and his openness form the structure of a powerful alternative system, the confidence strategy, which will leave its mark on the history of monetary policy.

Suggested Citation

  • Edwin Le Héron, 2006. "Alan Greenspan, The Confidence Strategy," Post-Print halshs-00159844, HAL.
    • Handle: RePEc:hal:journl:halshs-00159844
    DOI: 10.1590/S0101-31572006000400002
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00159844
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    References listed on IDEAS

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    1. Barro, Robert J. & Gordon, David B., 1983. "Rules, discretion and reputation in a model of monetary policy," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 101-121.
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    3. Edwin Heron & Emmanuel Carré, 2006. "The Monetary Policy of the ECB and the Fed: Credibility versus Confidence, a Comparative Approach," Palgrave Macmillan Books, in: Philip Arestis & Jesus Ferreiro & Felipe Serrano (ed.), Financial Developments in National and International Markets, chapter 5, pages 77-102, Palgrave Macmillan.
    4. Lars E O Svensson, 2005. "Monetary Policy with Judgment: Forecast Targeting," International Journal of Central Banking, International Journal of Central Banking, vol. 1(1), May.
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    Cited by:

    1. Angel Asensio, 2008. "(Post) Keynesian alternative to inflation targeting," Post-Print halshs-00335560, HAL.
    2. Angel Asensio, 2007. "Inflation targeting drawbacks in the absence of a 'natural' anchor," Post-Print halshs-00189225, HAL.

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    More about this item

    Keywords

    fedspeak; uncertainty; Taylor rule; Monetary policy; credibility; confidence;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-

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