Issues Concerning Nominal Anchors for Monetary Policy
Summary:
This paper presents a selective survey of issues relevant to the choice of nominal anchors for monetary policy. Section I reviews long price-level histories for the United Kingdom and United States, which reveal that the price level behaved very differently following WWII in these countries than it had done in previous post-war experiences. In particular following WWII the responsibilities of monetary policy expanded to encompass a business- cycle stabilization role and the nominal anchor shifted from the fixed anchor or price-level stability to the moving anchor of inflation-rate stability. The remaining sections of the paper review some of the considerations that are relevant to setting the average inflation rate in countries without a fixed nominal anchor.
Series:
Working Paper No. 1994/061
Subject:
Conventional peg Exchange rate arrangements Exchange rates Foreign exchange Inflation Monetary policy Nominal anchors Prices
Notes:
Reviews long price-level histories for the United Kingdom and United States.
English
Publication Date:
May 1, 1994
ISBN/ISSN:
9781451848106/1018-5941
Stock No:
WPIEA0611994
Pages:
41
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