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July/August 2004

Inflation Targeting: Prospects and Problems

Posted 2004-07-01

Contributing Authors

Posted 2004-07-01

Editors' Introduction

by Jeremy M. Piger and Daniel L. Thornton

Posted 2004-07-01

Inflation Targeting and Optimal Monetary Policy

by Michael Woodford

The author surveys the theoretical literature on optimal monetary policy. He concludes that the recent literature on the welfare consequences of alternative monetary policies finds that there is less tension between inflation stabilization and properly defined real stabilization objectives than traditional (nonwelfare-theoretic) literature on monetary stabilization policy has often suggested.

Posted 2004-07-01

Commentary on "Inflation Targeting and Optimal Monetary Policy"

by Stephanie Schmitt-Grohé

Posted 2004-07-01

The Macroeconomic Effects of Inflation Targeting

by Andrew T. Levin, Fabio M. Natalucci, and Jeremy M. Piger

The authors attempt to assess on empirical grounds whether inflation targeting has made a difference for economic performance. In the tradition of the existing literature on this topic, the authors ask whether the economic performance of a group of countries that have adopted inflation targeting differs substantially from a group of countries that have not.

Posted 2004-07-01

Commentary on "The Macroeconomic Effects of Inflation Targeting"

by Harald Uhlig

Posted 2004-07-01

The Role of Policy Rules in Inflation Targeting

by Kenneth N. Kuttner

The author notes that the view of inflation targeting as some sort of a monetary policy rule stems, in large part, from the fact that the adoption of it by many central banks and the explosion of research on monetary policy rules occurred at much the same time. He further notes that conditional rules allow the policymaker to respond in a reasonable (or even optimal) manner to economic conditions.

Posted 2004-07-01

Commentary on "The Role of Policy Rules in Inflation Targeting"

by Monika Piazzesi

Posted 2004-07-01

Is Inflation Targeting Best-Practice Monetary Policy?

by Jon Faust and Dale W. Henderson

The authors systematically analyze whether inflation targeting constitutes “best practice” monetary policy. They note that the inflation targeting perspective is bolstered by the now nearly universally accepted fact that there is no long-run Phillips curve trade-off of the traditional variety.

Posted 2004-07-01

Commentary on "Is Inflation Targeting Best-Practice Monetary Policy?"

by Benjamin M. Friedman

Posted 2004-07-01

Practical Problems and Obstacles to Inflation Targeting

by Laurence H. Meyer

The author first makes a distinction between what he terms inflation targeting and inflation targets. He notes that inflation-targeting countries generally operate with both an explicit numerical inflation target and a hierarchical mandate, under which central banks are restricted in pursuing other objectives unless price stability has been achieved.

Posted 2004-07-01

Commentary on "Practical Problems and Obstacles to Inflation Targeting"

by Lars E.O. Svensson

Posted 2004-07-01

Panel Discussion: Inflation Targeting

by Ben S. Bernanke, Otmar Issing, and Donald L. Kohn

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