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Inflation Targeting: A New Framework for Monetary Policy?

  • Ben S. Bernanke
  • Frederic S. Mishkin

In recent years a number of industrialized countries have adopted a strategy for monetary policy known as `inflation targeting.' We describe how this approach has been implemented in practice and argue that it is best understood as a broad framework for policy, which allows the central bank `constrained discretion,' rather than as an ironclad policy rule in the Friedman sense. We discuss the potential of the inflation-targeting approach for making monetary policy more coherent and transparent, and for increasing monetary policy discipline. Our final section addresses some additional practical issues raised by this approach.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5893.

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Date of creation: Jan 1997
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Publication status: published as Bernanke, Ben S. and Frederic S. Mishkin. "Inflation Targeting: A New Framework For Monetary Policy?," Journal of Economic Perspectives, 1997, v11(2,Spring), 97-116.
Handle: RePEc:nbr:nberwo:5893
Note: EFG ME
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