Inflation Targeting: What Can the ECB Learn from the Recent Experience of the Bank of England?

CEPR Discussion Paper Series No. 1941

Posted: 18 Jan 1999

See all articles by Paul Mizen

Paul Mizen

University of Nottingham; Bank of England; Centre for Economic Policy Research (CEPR)

Zenon G. Kontolemis

European Union - European Commission

Michael J. Artis

University of Manchester - Institute for Political & Economic Governance (IPEG)

Date Written: July 1998

Abstract

The establishment of the European Central Bank (ECB) presents a rare opportunity to define the operations of a central bank with no prior track record. Before the ECB specifies an, as yet undefined, operational target this paper asks what might be learnt from the recent experience of inflation targeting at the Bank of England. We consider whether there should be single or multiple targets and which, if any, of the existing inflation measures should be used. If inflation is targeted, then a forecast of its value becomes the intermediate variable. This raises both the issue of transparency and the issue of providing a compensating supply of information material necessary to fill the gap, but too much "openness" can also be problematic. The ECB must be accountable and the contracting approach may be useful, but being seen to "say" and "do" the same thing is ultimately of the most importance.

JEL Classification: E52, E58

Suggested Citation

Mizen, Paul and Kontolemis, Zenon G. and Artis, Michael J., Inflation Targeting: What Can the ECB Learn from the Recent Experience of the Bank of England? (July 1998). CEPR Discussion Paper Series No. 1941, Available at SSRN: https://ssrn.com/abstract=139395

Paul Mizen (Contact Author)

University of Nottingham ( email )

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Bank of England

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London, EC2R 8AH
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Centre for Economic Policy Research (CEPR)

London
United Kingdom

Zenon G. Kontolemis

European Union - European Commission ( email )

Belgium

Michael J. Artis

University of Manchester - Institute for Political & Economic Governance (IPEG) ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

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