Abstract: The recent debate over monetary strategies concludes that monetary and inflation targeting lead to very similar patterns of central bank behavior. Why, then, do central banks insist on the strategies they use. In this paper, we develop an answer from political economy, arguing that monetary strategies are helpful in solving internal and external coordination problems for the central bank. We illustrate the point by reviewing the Bundesbank's experience with money growth targeting in the mid-1970s. Monetary targeting was a signal that the previous monetary regime had been overcome, and a means to define the role of monetary policy vis-a-vis other players in the macro economic policy game, and to structure the internal monetary policy debate.
Publication Year: 2005
Publication Date: 2005-11-14
Language: en
Type: article
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Cited By Count: 1
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