Inflation Targeting: Lessons from Four Countries

2 Pages Posted: 25 Sep 2007

See all articles by Adam S. Posen

Adam S. Posen

Peterson Institute for International Economics

Frederic S. Mishkin

Columbia University - Columbia Business School, Finance; National Bureau of Economic Research (NBER)

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Abstract

In recent years, a number of central banks have chosen to orient their monetary policy toward the achievement of numerical inflation targets. This study examines the experience of the first three countries to adopt an inflation-targeting strategy - New Zealand, Canada, and the United Kingdom. It also considers the German experience with a monetary targeting scheme that incorporated many elements of inflation targeting even earlier. The authors find that the countries adopting a numerical inflation target have successfully maintained low inflation rates. Other benefits of inflation targeting include increased central bank accountability, heightened public understanding of monetary policy, and an improved climate for economic growth.

Keywords: inflation targeting

JEL Classification: E31, E52, E58

Suggested Citation

Posen, Adam S. and Mishkin, Frederic S., Inflation Targeting: Lessons from Four Countries. Economic Policy Review, Vol. 3, No. 3, August 1997, Available at SSRN: https://ssrn.com/abstract=1016205

Adam S. Posen (Contact Author)

Peterson Institute for International Economics ( email )

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Frederic S. Mishkin

Columbia University - Columbia Business School, Finance ( email )

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National Bureau of Economic Research (NBER)

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