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| Tekijä: | Herrendorf, B. |
| Otsikko: | Inflation targeting as a way of precommitment |
| Lehti: | Oxford Economic Papers
1998 : JUL, VOL. 50:3, p. 431-448 |
| Asiasana: | Monetary policy Inflation Central banks |
| Kieli: | eng |
| Tiivistelmä: | In the paper, an institutional arrangement is considered in which the government assigns a publicly-announced inflation target to an instrument-independent central bank, but retains the discretion to revise the inflation target after wages have been set. It is argued that since this arrangement is transparent, it solves Canzoneri's private information problem, ensures perfect monitoring of the government, and makes reputational forces more effective. Cases are characterized in which, for this reason, inflation targeting mitigates the inflationary bias of monetary policy. |
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