Book contents
- Frontmatter
- Contents
- List of illustrations
- Acknowledgements
- List of abbreviations
- 1 A beginner's guide to central banking
- 2 Very boring guys?
- 3 Wind in the willows: the small world of central banking c. 1900
- 4 Something for everyone: new central banks, 1900–1939
- 5 A series of disasters: central banking, 1914–1939
- 6 The mysteries of central bank cooperation
- 7 The first central banking revolution
- 8 No time for cosmic thinkers: Central banking in the ‘Keynesian’ era
- 9 Rekindling central bank cooperation in the Bretton Woods era
- 10 The goose that lays the golden egg: Central banking in developing countries
- 11 The horse of inflation
- 12 The second central banking revolution: Independence and accountability
- 13 Reputations at stake: financial deregulation and instability
- 14 Inflation targeting: the holy grail?
- 15 The long march to European monetary integration
- 16 A world with half a million central bankers
- References
- Index
14 - Inflation targeting: the holy grail?
Published online by Cambridge University Press: 04 February 2011
- Frontmatter
- Contents
- List of illustrations
- Acknowledgements
- List of abbreviations
- 1 A beginner's guide to central banking
- 2 Very boring guys?
- 3 Wind in the willows: the small world of central banking c. 1900
- 4 Something for everyone: new central banks, 1900–1939
- 5 A series of disasters: central banking, 1914–1939
- 6 The mysteries of central bank cooperation
- 7 The first central banking revolution
- 8 No time for cosmic thinkers: Central banking in the ‘Keynesian’ era
- 9 Rekindling central bank cooperation in the Bretton Woods era
- 10 The goose that lays the golden egg: Central banking in developing countries
- 11 The horse of inflation
- 12 The second central banking revolution: Independence and accountability
- 13 Reputations at stake: financial deregulation and instability
- 14 Inflation targeting: the holy grail?
- 15 The long march to European monetary integration
- 16 A world with half a million central bankers
- References
- Index
Summary
It is always premature to declare that policy makers have found the Holy Grail in the current design of monetary policy … Nevertheless, it should be noted that the inflation targeting regime will soon surpass in longevity all the other monetary policy regimes over the last half century or so of economic history.
Pierre Siklos (2002: 308)By imposing a conceptual structure and its inherent discipline on the central bank, but without eliminating all flexibility, inflation targeting combines some of the advantages traditionally ascribed to rules with those ascribed to discretion.
Bernanke et al. (1999: 6)Inflation targeting was an important component, alongside CBI, accountability, and transparency, of the second revolution in central banking. A number of central banks began to target inflation directly in the 1990s, rather than indirectly through an intermediate target such as the growth rate of the money supply. By 2004, formal inflation-targeting regimes were in place in countries making up one-quarter of the world economy (Rose 2007: 664, 679), including both developed and developing countries. But this underestimates the influence of inflation targeting. In addition the ECB followed a policy that was in many respects akin to inflation targeting. The argument was sometimes made that the Fed already had an ‘implicit’ inflation target under Greenspan (Goodfriend 2007: 54). Ben Bernanke, his successor, was an advocate of inflation targeting, but did not make this into official policy.
- Type
- Chapter
- Information
- Central Banking in the Twentieth Century , pp. 241 - 258Publisher: Cambridge University PressPrint publication year: 2010