Coordinating Expectations in Monetary Policy
نویسندگان
چکیده
The last fteen years have seen a remarkable revolution in both the conduct of and the common understanding of monetary policy around the world. This revolution has encompassed instruments, with an increased emphasis on transparency about short and medium run central bank policy planning and decreased emphasis on intermediate targets such as monetary aggregates. This revolution has also encompassed objectives, with an increased emphasis on medium run in ation targets. However, the objective question cannot be separated from the instrument question. In particular, in ation targeting is seen as a key component of transparent monetary policy. At the heart of this revolution is a change in perspective about what monetary policy is all about. The traditional perspective viewed monetary policy as an engineering problem. The central banker had a set of instruments under his control, faced uncertainty outside his control and sought to manipulate his instruments to achieve targets. The modern perspective views monetary policy as a strategic
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