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Papers on “inflation monetary policy central bank”

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

   Richard H. Clarida, Jordi Gaĺı, Mark L. Gertler · 1999 · Journal of Economic Literature · 5,034 cites

   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.

2. Monetary policy rules in practice

   Richard H. Clarida, Jordi Gaĺı, Mark L. Gertler · 1998 · European Economic Review · 2,248 cites

   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

3. Monetary Policy Rules Under Heterogeneous Inflation Expectations

   Sophocles N. Brissimis, Nicholas S. Magginas · 2017 · SSRN Electronic Journal · 1,709 cites

   This paper evaluates the role of inflation-forecast heterogeneity in US monetary policy making. The deviation between private and central bank inflation forecasts is identified as a factor increasing inflation persistence and thus calling for a policy reaction. An optimal policy rule is derived by the minimization under discretion of a standard central bank loss function subject to a Phillips curve, modified to include the forecast deviation, and a forward-looking aggregate demand equation. This rule, which itself includes the forecast deviation as an additional argument, is estimated for the period 1974-1998, covering the Chairmanships of Arthur Burns, Paul Volcker and Alan Greenspan, by us

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

   Vittorio Grilli, Donato Masciandaro, Guido Tabellini, et al. · 1991 · Economic Policy · 1,609 cites

   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

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

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

   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

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

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

   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

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

   Ben Bernanke, Frederic S. Mishkin · 1997 · The Journal of Economic Perspectives · 1,236 cites

   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.

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

   Ben Bernanke, Mark L. Gertler · 2001 · American Economic Review · 1,191 cites

   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