Publication:
From Monetary Targeting to Inflation Targeting : Lessons from the Industrialized Countries

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dc.contributor.authorMishkin, Frederic S.
dc.date.accessioned2014-08-20T20:54:53Z
dc.date.available2014-08-20T20:54:53Z
dc.date.issued2001-10
dc.description.abstractThe author examines changes in monetary policy in industrial countries by evaluating, and providing case studies of monetary targeting, and inflation targeting. Inflation targeting has successfully controlled inflation, with some qualifications. It weakens the effects of inflationary shocks, as examples from Canada, Sweden, and the United Kingdom show. It can promote growth, and does not lead to increased fluctuations in output. But inflation targets do not necessarily reduce the cost of reducing inflation. The key to success of inflation targeting, is its stress on transparency, and communication with the public. Inflation targeting increases accountability, which helps ameliorate the time-inconsistency trap (in which the central bank tries to expand output, and employment in the short run, by pursuing overly expansionary monetary policy). Time-inconsistency is more likely to come from political pressures on the central bank, to engage in overly expansionary monetary policy. A key advantage of inflation targeting, is that it helps focus the political debate on what a central bank can do in the long run (control inflation) rather than what it cannot do (raise economic growth, and the number of jobs permanently through expansionary monetary policy). By increasing transparency, and accountability, inflation targeting helps promote central bank independence. Accountability to the general public seems to work as well as direct accountability to the government. Inflation targeting is consistent with democratic principles. In discussing operational design, the author explains, among other things, that: 1) Inflation targeting is far from rigid rule. 2) Inflation targets have always been above zero with no loss of credibility. 3) Inflation targeting does not ignore traditional stabilization goals. 4) Avoiding undershoots of the inflation target, is as important, as avoiding overshoots. 5) When inflation is initially high, inflation targeting may have to be phased-in after disinflation. 6)The edges of the target range, can take on a life of their own. 7) Targeting asset prices, such as the exchange rate, worsens performance.en
dc.identifierhttp://documents.worldbank.org/curated/en/2001/10/1614818/monetary-targeting-inflation-targeting-lessons-industrialized-countries
dc.identifier.doi10.1596/1813-9450-2684
dc.identifier.urihttps://hdl.handle.net/10986/19531
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 2684
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectAGGREGATE DEMAND
dc.subjectANNUAL INFLATION
dc.subjectANNUAL INFLATION RATE
dc.subjectASSET PRICES
dc.subjectBANK DEPOSITS
dc.subjectCASH RATE
dc.subjectCENTRAL BANK
dc.subjectCENTRAL BANKS
dc.subjectCOMMERCIAL BANKS
dc.subjectCONTROL OF INFLATION
dc.subjectDEFLATION
dc.subjectDEVALUATION
dc.subjectDISINFLATION
dc.subjectECONOMIC ACTIVITY
dc.subjectECONOMIC GROWTH
dc.subjectECONOMIC PERFORMANCE
dc.subjectECONOMIC RESEARCH
dc.subjectEXCHANGE RATE
dc.subjectEXCHANGE RATE DEPRECIATION
dc.subjectEXCHANGE RATES
dc.subjectEXPANSIONARY MONETARY POLICY
dc.subjectEXPORTS
dc.subjectFINANCIAL INNOVATION
dc.subjectFINANCIAL MARKET STABILITY
dc.subjectFINANCIAL SECTOR
dc.subjectGDP
dc.subjectGROWTH RATE
dc.subjectGROWTH RATES
dc.subjectHIGH
dc.subjectHIGH INFLATION
dc.subjectHIGH PRIORITY
dc.subjectINDUSTRIAL COUNTRIES
dc.subjectINFLATION
dc.subjectINFLATION
dc.subjectINFLATION CONCERNS
dc.subjectINFLATION PROCESS
dc.subjectINFLATION RATE
dc.subjectINFLATION RATES
dc.subjectINFLATION RISING
dc.subjectINFLATION TARGET
dc.subjectINFLATION TARGETING
dc.subjectINFLATION TARGETING REGIME
dc.subjectINFLATION TARGETS
dc.subjectINSTITUTIONAL CHANGES
dc.subjectINSTITUTIONAL STRUCTURE
dc.subjectINTEREST RATE
dc.subjectINTEREST RATES
dc.subjectINTERNATIONAL EXPERIENCE
dc.subjectLIQUIDITY
dc.subjectLOW INFLATION
dc.subjectM2
dc.subjectM3
dc.subjectMONETARY AGGREGATE
dc.subjectMONETARY AGGREGATES
dc.subjectMONETARY AUTHORITIES
dc.subjectMONETARY BASE
dc.subjectMONETARY POLICY
dc.subjectMONETARY TARGETING
dc.subjectMONEY BASE
dc.subjectMONEY GROWTH
dc.subjectNOMINAL ANCHOR
dc.subjectNOMINAL INCOME
dc.subjectOPEN ECONOMIES
dc.subjectOUTPUT GROWTH
dc.subjectPOLICY INSTRUMENTS
dc.subjectPOLICY RESEARCH
dc.subjectPOLICY TARGETS
dc.subjectPOTENTIAL OUTPUT
dc.subjectPRICE INCREASES
dc.subjectPRICE LEVEL
dc.subjectPRICE STABILITY
dc.subjectPUBLIC SECTOR
dc.subjectQUANTITY THEORY
dc.subjectREAL OUTPUT
dc.subjectREDUCING INFLATION
dc.subjectRESERVE
dc.subjectRESURGENCE OF INFLATION
dc.subjectRISE IN INFLATION
dc.subjectTERMS OF TRADE
dc.subjectTERMS OF TRADE SHOCK
dc.subjectTIGHT MONETARY POLICY
dc.subjectTRANSPARENCY
dc.subjectTRUSTS
dc.subjectUNEMPLOYMENT
dc.titleFrom Monetary Targeting to Inflation Targeting : Lessons from the Industrialized Countriesen
dspace.entity.typePublication
okr.crossref.titleFrom Monetary Targeting to Inflation Targeting: Lessons from Industrialized Countries
okr.date.disclosure2001-10-31
okr.date.doiregistration2025-04-10T09:41:16.702932Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2001/10/1614818/monetary-targeting-inflation-targeting-lessons-industrialized-countries
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeFinance and Markets
okr.guid841191468766825603
okr.identifier.doi10.1596/1813-9450-2684
okr.identifier.externaldocumentum000094946_01101304063033
okr.identifier.internaldocumentum1614818
okr.identifier.reportWPS2684
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2001/10/27/000094946_01101304063033/Rendered/PDF/multi0page.pdfen
okr.sectorOther Finance
okr.sectorFinance
okr.topicEconomic Theory and Research
okr.topicFinance and Financial Sector Development::Financial Intermediation
okr.topicEnvironmental Economics and Policies
okr.topicMacroeconomics and Economic Growth::Inflation
okr.topicMacroeconomics and Economic Growth::Macroeconomic Management
okr.topicPayment Systems and Infrastructure
okr.topicMacroeconomics and Economic Growth::Economic Stabilization
okr.unitOff of Sr VP Dev Econ/Chief Econ (DECVP)
okr.volume1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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