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Inflation Targeting

  • Lars E.O. Svensson

Inflation targeting is a monetary-policy strategy that is characterized by an announced numerical inflation target, an implementation of monetary policy that gives a major role to an inflation forecast and has been called forecast targeting, and a high degree of transparency and accountability. It was introduced in New Zealand in 1990, has been very successful in terms of stabilizing both inflation and the real economy, and has, as of 2010, been adopted by about 25 industrialized and emerging-market economies. The chapter discusses the history, macroeconomic effects, theory, practice, and future of inflation targeting.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16654.

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Date of creation: Dec 2010
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Publication status: published as “Inflation Targeting,” in Friedman, Benjamin M., and Michael Woodford, eds., Handbook of Monetary Economics, Volume 3b, Elsevier, 2011.
Handle: RePEc:nbr:nberwo:16654
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