Current Issues in the Design and Conduct of Monetary Policy
March 1, 2003
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Summary
Movements in global capital during the late 1990s and the greater emphasis on price stability led many countries to abandon fixed exchange rate regimes and to design institutions and monetary policies to achieve credibility in the goal of lowering inflation. Such recent developments have brought to the forefront the idea that freely mobile capital, independent monetary policy, and fixed exchange rates form an "impossible trinity." It is possible to have two of these policies, but not all three. Inflation-targeting regimes being adopted by many countries provide a way of resolving this dilemma.
Subject: Banking, Exchange rate arrangements, Exchange rates, Foreign exchange, Inflation, Inflation targeting, Monetary aggregates, Monetary policy, Money, Prices
Keywords: Africa, central bank, country, Exchange rate arrangements, Exchange rates, Global, government, Inflation, inflation targeting, inflation targeting approach, inflation targeting country, inflation targeting framework, inflation-targeting strategy, managed exchange rate regime, Monetary aggregates, monetary policy, monetary policy objective, monetary policy target, rules versus discretion, WP
Pages:
18
Volume:
2003
DOI:
Issue:
056
Series:
Working Paper No. 2003/056
Stock No:
WPIEA0562003
ISBN:
9781451847727
ISSN:
1018-5941
