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Research papers on Inflation and monetary policy

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  1. The Science of Monetary Policy: A New Keynesian Perspective

    Richard H. Clarida, Jordi Gaĺı, Mark Gertler · 1999 · Journal of Economic Literature · 5,017 citations

    The paper reviews the recent literature on monetary policy rules. We exposit the monetary policy design problem within a simple baseline theoretical framework. We then consider the implications of adding various real world complications. Among other things, we show that the optimal policy implicitly incorporates inflation targeting. We also characterize the gains from making a credible commitment to fight inflation. In contrast to conventional wisdom, we show that gains from commitment may emerge even if the central bank is not trying to inadvisedly push output above its natural level. We also consider the implications of frictions such as imperfect information.

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  2. Monetary policy rules in practice

    Richard H. Clarida, Jordi Gaĺı, Mark Gertler · 1998 · European Economic Review · 2,241 citations

    Abstract This paper reports estimates of monetary policy reaction functions for two sets of countries: the G3 (Germany, Japan, and the US) and the E3 (UK, France, and Italy). We find that since 1979 each of the G3 central banks has pursued an implicit form of inflation targeting, which may account for the broad success of monetary policy in those countries over this time period. The evidence also suggests that these central banks have been forward looking: they respond to anticipated inflation as opposed to lagged inflation. As for the E3, even prior to the emergence of the `hard ERM', the E3 central banks were heavily influenced by German monetary policy. Further, using the Bundesbank's p

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  3. Political and Monetary Institutions and Public Financial Policies in the Industrial Countries

    Vittorio Grilli, Donato Masciandaro, Guido Tabellini, et al. · 1991 · Economic Policy · 1,605 citations

    Institutions and policies Vittorio Grilli, Donato Masciandaro and Guido Tabellini Why do countries as similar as the industrialized OECD countries go through such different experience in terms of public deficits and debts or in terms of inflation? The answer cannot come from macroeconomic policy responses to different disturbances, nor from the principles of optimal taxation, but rather from politics. This article focuses on the role that particular institutions exert in providing constraints and incentives which shape the actions of policymakers. The electoral process and political traditions affect the ability of governments to deal with deficits and mounting debts. What seems to matter mo

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  4. Central Bank Strategy, Credibility, and Independence: Theory and Evidence

    Alex Cukierman · 1992 · RePEc: Research Papers in Economics · 1,399 citations

    Part 1 Motives for monetary expansion under perfect information: overview the employment motive for monetary expansion the revenue motive for monetary expansion the mercantile or balance-of-payments motive for monetary expansion comparison of policy outcomes under a system of adjustable pegs with outcomes under a commonly managed currency system and its consequences for European monetary unification the financial stability motive, interest rate smoothing, and the theory of optimal seigniorage. Part 2 Asymmetric information and changing objectives under discretion: overview of models of monetary policy with private information the employment motive in the presence of a minimal information adv

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  5. Interest and prices : foundations of a theory of monetary policy

    Michael Woodford · 2003 · Project Muse (Johns Hopkins University) · 1,280 citations

    With the collapse of the Bretton Woods system, any pretense of a connection of the world's currencies to any real commodity has been abandoned. Yet since the 1980s, most central banks have abandoned money-growth targets as practical guidelines for monetary policy as well. How then can pure fiat currencies be managed so as to create confidence in the stability of national units of account? Interest and Prices seeks to provide theoretical foundations for a rule-based approach to monetary policy suitable for a world of instant communications and ever more efficient financial markets. In such a world, effective monetary policy requires that central banks construct a conscious and articulate acco

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  6. Inflation Targeting: A New Framework for Monetary Policy?

    Ben Bernanke, Frederic S. Mishkin · 1997 · The Journal of Economic Perspectives · 1,229 citations

    In recent years, a number of industrialized countries have adopted a strategy for monetary policy known as ‘inflation targeting.’ The authors describe how this approach has been implemented in practice and argue that it is best understood as a broad framework for policy, which allows the central bank ‘constrained discretion,’ rather than as an ironclad policy rule in the Friedman sense. They discuss the potential of the inflation-targeting approach for making monetary policy more coherent and transparent and for increasing monetary policy discipline. The authors' final section addresses some additional practical issues raised by this approach.

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  7. Should Central Banks Respond to Movements in Asset Prices?

    Ben Bernanke, Mark Gertler · 2001 · American Economic Review · 1,186 citations

    In recent decades, asset booms and busts have been important factors in macroeconomic fluctuations in both industrial and developing countries. In light of this experience, how, if at all, should central bankers respond to asset price volatility? We have addressed this issue in previous work (Bernanke and Gertler, 1999). The context of our earlier study was the relatively new, but increasingly popular, monetary-policy framework known as inflation-targeting (see e.g., Bernanke and Frederic Mishkin, 1997). In an inflation-targeting framework, publicly announced medium-term inflation targets provide a nominal anchor for monetary policy, while allowing the central bank some flexibility to help s

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  9. Monetary policy, inflation, and the business cycle : an introduction to the new Keynesian framework

    Jordi Gaĺı · 2008 · 920 citations

    The New Keynesian framework has emerged as the workhorse for the analysis of monetary policy and its implications for inflation, economic fluctuations, and welfare. It is the backbone of the new generation of medium-scale models under development at major central banks and international policy institutions, and provides the theoretical underpinnings of the inflation stability-oriented strategies adopted by most central banks throughout the industrialized world. This graduate-level textbook provides an introduction to the New Keynesian framework and its applications to monetary policy. Using a canonical version of the New Keynesian model as a reference framework, Jordi Gali explores issues

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  10. Inflation Forecasts and Monetary Policy

    Ben Bernanke, Michael Woodford · 1997 · National Bureau of Economic Research · 436 citations

    Proposals for 'inflation targeting' as a strategy for monetary policy leave open the important operational question of how to determine whether current policies are consistent with the long-run inflation target. An interesting possibility is that the central bank might target current private-sector forecasts of inflation, either those made explicitly by professional forecasters or those implicit in asset prices. We address the issue of existence and uniqueness of rational expectations equilibria when the central bank uses private-sector forecasts as a guide to policy actions. In a dynamic model which incorporates both sluggish price adjustment and shocks to aggregate demand and aggregate sup

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  11. Inflation and economic growth: the search for a compromise for the Central Bank's monetary policy

    Volodymyr Mishchenko, Svitlana Naumenkova, Svitlana Mishchenko, et al. · 2018 · Banks and Bank Systems · 28 citations

    The article analyzes the influence of inflation on economic growth and substantiates the main directions of increasing the effectiveness of the central bank's anti-inflation policy. In order to determine the limit of inflation, the excess of which has a negative impact on the economic growth, the relationship is analyzed between the inflation rate and the real GDP growth rate on the basis of IMF statistics using the example of 158 countries. It was determined that in 2010–2017, in the global economy, the 6.0% inflation was the marginal value of the inflation rate, beyond which the economic growth rate declined or slowed down. Given the inverse relationship between the inflation rate and the

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  16. Monetary Policy Challenges and Central Bank Independence in Uzbekistan’s Inflation Targeting Transition

    Umida Abdugaffarovna Ganieva · 2024 · Academia Open

    This article examines second language learning ability by analyzing second language development. It also examines the age factor in learning a language other than the mother tongue and attempts to clarify whether there is currently sufficient evidence to show that young people undergo real changes in their language skills.. Research such as inspiration for the learning climate, as well as exposure and behavior in the language will also be addressed and data analyzed to assess if they play an essential role in encouraging students to achieve effective second language skills. It was widely known to create a big improvement in language learning when you are young to study a second language. How

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  17. Inflation and Monetary Policy: Analysis of the Impact of Inflation and Central Bank Policy on the National Economy

    O. R. Egamberdiev · 2026 · Finance: Theory and Practice

    The subject of the study is the inflationary processes and monetary policy of the Bank of Russia. The purpose is to analyze the impact of these factors on the state of the Russian economy. To achieve this goal, the following tasks have been set: to consider the theoretical aspects of the relationship between inflation, PREP and economic growth; to analyze the dynamics of inflation and the key tools of the PREP of the Bank of Russia for the period from 2010 to 2024; to conduct an econometric analysis of the impact of inflation and the key rate on GDP growth. The relevance of the topic arises from the importance of finding a balance between ensuring price stability and supporting economic grow

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  18. Disaggregated inflation rate in the monetary policy of the central bank

    Aleksandra Hałka · 2017 · Wiadomości Statystyczne. The Polish Statistician

    This article aims at presenting the results of the research concerning disaggregated price index in the assessment of inflation processes in Poland. Presented analysis shows that isaggregated approach allows for a fuller understanding of the nature of the price-setting process and etter identification of factors affecting inflation. The results indicate three conclusions. Firstly, a significant part of the inflation in Poland is dependent on domestic factors. Secondly, the core inflation rate should not be equated with the measure of demand pressures in the economy. Thirdly, a set of external factors affecting the price-setting process in Poland is relatively wide and distinct for different

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  19. How do Monetary Policy and Inflation Announcements Affect Firm Expectations in High Inflation?

    Okan Akarsu, Emrehan Aktuğ · 2026 · Journal of the European Economic Association

    Abstract This paper examines how monetary policy committee announcements and inflation surprises affect Turkish firms’ inflation expectations and foreign exchange (FX) management decisions during the 2015–2024 period—a time characterized by both relatively stable and highly volatile inflation. Using survey data, we define monetary policy (inflation) surprises as the unexpected component of interest rate (inflation) forecasts measured within a narrow window around policy announcements. First, we show that firms’ aggregate inflation expectations change significantly in response to monetary policy shocks, but their response is highly state-dependent: In relatively stable infla

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  20. Monetary Policy and Inflation Targeting: The Effectiveness of Central Bank Interventions

    Dimple Jain · 2024 · International Journal for Research Publication and Seminar

    Central banks throughout the world have adopted inflation targeting as their main policy goal in the last several decades, drastically altering monetary policy—a pillar of economic management. the complex interplay between monetary policy, central bank interventions and measures for controlling inflation, and the success or failure of inflation targeting as a whole. This research aims to shed light on the extent to which central bank operations impact inflation results and the larger economic environment by conducting a thorough review of empirical evidence, case studies, and theoretical frameworks.

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