The Inflation-Targeting Debate
Ben S. Bernanke, Michael Woodford, National Bureau of Economic Research
University of Chicago Press, 2005 - Business & Economics - 458 pages
Over the past fifteen years, a significant number of industrialized and middle-income countries have adopted inflation targeting as a framework for monetary policymaking. As the name suggests, in such inflation-targeting regimes, the central bank is responsible for achieving a publicly announced target for the inflation rate. While the objective of controlling inflation enjoys wide support among both academic experts and policymakers, and while the countries that have followed this model have generally experienced good macroeconomic outcomes, many important questions about inflation targeting remain.
In Inflation Targeting, a distinguished group of contributors explores the many underexamined dimensions of inflation targeting—its potential, its successes, and its limitations—from both a theoretical and an empirical standpoint, and for both developed and emerging economies. The volume opens with a discussion of the optimal formulation of inflation-targeting policy and continues with a debate about the desirability of such a model for the United States. The concluding chapters discuss the special problems of inflation targeting in emerging markets, including the Czech Republic, Poland, and Hungary.
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What Has Inflation Targeting Achieved?
Implementing Optimal Policy through InflationForecast Targeting
Optimal InflationTargeting Rules
Inflation Targeting PricePath Targeting and Output Variability
Imperfect Knowledge Inflation Expectations and Monetary Policy
Does Inflation Targeting Matter?
Limits to Inflation Targeting
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adopt assume average bank's Bernanke central bank changes coefficients commitment constraint countries Czech Republic decision cycle determinacy deviations discussion disinflation disturbances effect endogenous variables equation estimated euro exchange rate exogenous explicit Fed's first-order condition forecast paths forward-looking geting Giannoni Greenspan Fed growth headline inflation imperfect knowledge implied impulse response increase inflation and output inflation expectations inflation rate inflation targeting inflation-targeting instrument rule lagged long-run inflation loss function low inflation macroeconomic Mark Gertler Michael Woodford Mishkin monetary policy rule NBER nominal interest rate nontargeters objective optimal equilibrium optimal policy optimal target criterion output gap paper parameters percent percentage points period Phillips curve Poland policymakers price level price stability price-level targeting problem procedure quarter rational expectations reaction function real wage regime relative result sample shocks specific targeting rule sudden stop Svensson target variables tion transition economies transmission mechanism weight Woodford zero