Suchergebnisse

What are the effects of a higher central bank inflation target on the burden of real public debt? Several recent proposals have suggested that even a moderate increase in the inflation target can have a pronounced effect on real public debt. We consider this question in a New Keynesian model with a maturity structure of public debt and an imperfectly observed inflation target. We find that moderate changes in the inflation target only have significant effects on real public debt if they are essentially permanent. Moreover, the additional benefits of not communicating a change in the inflation target are minor. -- Public debt ; learning ; inflation target ; callable perpetuity ; debt maturity

In various speeches, former Fed Chairman Ben Bernanke contrasted the proposal of setting a higher inflation target by claiming that it could unanchor inflation expectations. A standard New Keynesian framework with learning supports this claim both asymptotically, because a higher inflation target shrinks the E-stability region when a central bank follows a Taylor rule, and in the transition phase, because a higher inflation target slows down the speed of convergence of expectations. Transparency helps anchoring expectations. However, the importance of being transparent diminishes with the level of the inflation target. Finally, the higher the inflation target, the more policy should respond to inflation and the less to output to guarantee E-stability. Hence, a policy that increases both the inflation target and the monetary policy response to output would be "reckless''.

We highlight important aspects and consequences of using inflation targets during disinflation. Our illustrative theoretical model suggests annual revisions to short run are larger when the target is undershot than when the target is overshot. We confirm the result using cross–country panel estimates from a unique data set of inflation target misses in 60 countries in the 1990s. During disinflation the decision to change the target and policy instrument may sometimes be difficult to separate. Such short–term targets may be more akin to conditional forecasts than policy rules, but their publication nevertheless increases transparency and hence helps policymakers to achieve lower inflation.

The paper gives a brief account of the Swedish experience of an inflation target in a floating exchange rate regime; identifies, documents and discusses the current problems in Swedish monetary policy and their origins; suggests what can be done to remedy the problems; and draws some general conclusions. The two main current problems are the lack of credibility of the target and the significant risk that the target will be missed. The reasons for the lack of credibility include the fiscal situation, the institutional setup of monetary policy, the political division about monetary polcy, and the insufficient transparency of and commitement to the current inflation-targeting policy.

Inflation targeting has become the monetary policy framework of the nineties. At the other extreme, several central banks have recently adopted key elements of the inflation targeter's toolkit, but at the same time they have made formal declarations that they are not inflation targeters. Such a position may appear surprising. It indirectly suggests that a reneging strategy is beneficial for some. The paper considers reasons why it may be advantageous for some central banks to distinguish themselves from the inflation-targeting strategy. Most importantly, we argue that explicit inflation targets can potentially undermine the goal independence of a central bank. [Copyright 2006 Elsevier B.V.]

The objective of this paper is to evaluate the efficiency of inflation target regime in developing countries and to discuss the importance of independent central banks. As inflation control is the main central banks objective, agreed by targets established by the government, and as monetary policy has no instantaneous impact over inflation, the monetary authority must try to anticipate inflationary pressure. In this way, we want to understand how monetary policys decisions are made under inflation target regime.