Issues Concerning Nominal Anchors for Monetary Policy
May 1, 1994
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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.
Subject: Conventional peg, Exchange rate arrangements, Exchange rates, Foreign exchange, Inflation, Monetary policy, Nominal anchors, Prices
Keywords: Conventional peg, economic system, Exchange rate arrangements, Exchange rates, Inflation, inflation rate, inflation standard, monetary policy, Nominal anchors, paper money, price level, price-level result, rate of inflation, United States price level, WP
Pages:
41
Volume:
1994
DOI:
Issue:
061
Series:
Working Paper No. 1994/061
Stock No:
WPIEA0611994
ISBN:
9781451848106
ISSN:
1018-5941
Notes
Reviews long price-level histories for the United Kingdom and United States.
