Greater Monetary Policy Transparency for the G3: Lessons From Full-Fledged Inflation Targeters
November 1, 2003
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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.
Subject: Banking, Deflation, Inflation, Inflation targeting, Monetary policy, Monetary policy transparency, Price stabilization, Prices
Keywords: central bank, Deflation, EIT country, FFIT regime, Full-fledged inflation targeting, government, government website, IFFIT country, Inflation, inflation rate, inflation targeting, liquidity trap, monetary policy, monetary policy framework, Monetary policy transparency, Price stabilization, WP
Pages:
27
Volume:
2003
DOI:
Issue:
218
Series:
Working Paper No. 2003/218
Stock No:
WPIEA2182003
ISBN:
9781451875164
ISSN:
1018-5941
