This paper studies the incentives a central bank faces in announcing inflation targets when the central bank has private information about the economy and the public is uncertain about the central bank’s preferences. Targeting rules in the absence of announcements reduce the inflationary bias of discretionary policy, but they distort the central bank’s response to private information about the ...

The European Monetary Institute have narrowed down the choice of candidate strategies for a single monetary policy within European Monetary Union to inflation targets or monetary aggregate targets. In practice it is unlikely to be a simple choice between these targets, since all monetary authorities that currently pursue either of these strategies also monitor a wide set of economic and financi...

This paper investigates the consequences of debt stabilization for inflation targeting. If the monetary authority perfectly stabilizes inflation while the fiscal authority holds constant the real value of debt at maturity, the equilibrium dynamics might be indeterminate. However, determinacy can be restored by committing to targeting rules for either monetary or fiscal policy that include a con...

In the 1990s, several countries shifted to a new monetary policy regime: an announced quantitative inflation target. The reason for this shift was the unsatisfactory performance under previous regimes. New Zealand, Canada, Australia, and Spain all introduced inflation targets under persistently high inflation; the United Kingdom, Sweden, and Finland did so after having abandoned fixed exchange ...

The range of issues relevant to the design of an inflation-targeting framework means that a fully comprehensive review is a very substantial task. Haldane has wisely narrowed down his field of discussion to three questions: what level to set an inflation target?; over what horizon?; and should inflation forecasts be published? Haldane makes a very welcome contribution to all of these topics. Th...

The paper looks at the evolution of monetary policy in industrialized countries by evaluating two monetary policy strategies, monetary targeting and inflation targeting. The paper provides brief case studies of countries that have adopted these two strategies and draws a set of lessons. The experience with monetary targeting suggests that although it was successful in controlling inflation in S...