Inflation Targeting Debate

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. TABLE OF CONTENTS List of Figures Preface Part One: Inflation Targeting: The Issues 1. Introduction 2. The Rationale for Inflation Targeting 3. Issues of Design and Implementation Part Two: Case Studies and Empirical Evidence 4. German and Swiss Monetary Targeting: Precursors to Inflation Targeting 5. New Zealand: Inflation-Targeting Pioneer 6. Canada: Inflation Targets as Tools of Communication 7. United Kingdom: The Central Bank as Counterinflationary Conscience 8. Sweden: Searching for a Nominal Anchor 9. Three Small Open Economies: Israel, Australia, and Spain 10. Inflation Targeting: How Successful Has It Been? Part Three: Conclusions 11. What Have We Learned? 12. Inflation Targeting for the United States and the European Monetary Union Notes References Index