Greater Monetary Policy Transparency for the G3: Lessons From Full-Fledged Inflation Targeters

Author/Editor:

Mark R. Stone

Publication Date:

November 1, 2003

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The experience of full-fledged inflation targeting (FFIT) countries is used here to shed light on the costs and benefits of greater monetary policy transparency for the G3. For the United States and the euro area, a hypothetical adoption of FFIT would incur a cost of less discretion while gaining the benefit of locking in a highly credible framework. The adoption of FFIT by Japan would create the risk of a further hit to credibility if policy was not able to end deflation. In practice, the G3 are already moving toward a new monetary regime that resembles FFIT in transparency, but not in accountability.

Series:

Working Paper No. 2003/218

Subject:

Banking Deflation Inflation Inflation targeting Monetary policy Monetary policy transparency Price stabilization Prices

English

Publication Date:

November 1, 2003

ISBN/ISSN:

9781451875164/1018-5941

Stock No:

WPIEA2182003

Pages:

27

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