Multiple Objectives in Monetary Policy: A De Facto Analysis for ‘Advanced’ Countries

24 Pages Posted: 17 Jun 2015

See all articles by David Cobham

David Cobham

Heriot-Watt University - School of Management and Languages

Date Written: September 2015

Abstract

A statistical methodology is developed to identify when policymakers in ‘advanced’ economies have successfully pursued different single objectives or multiple objectives. Multiple objectives pure and simple are distinguished from multiple objectives subject to a price stability constraint. The overall and individual country results seem plausible. Unconditional and conditional analyses reveal that constrained multiple objectives are associated with roughly as good economic performance (inflation, economic growth) as the single objective of inflation. Finally the paper shows how the remit of an inflation‐targeting central bank could be adjusted to allow it to pursue other objectives in extremis without losing the credibility effects associated with inflation targeting.

Suggested Citation

Cobham, David, Multiple Objectives in Monetary Policy: A De Facto Analysis for ‘Advanced’ Countries (September 2015). The Manchester School, Vol. 83, pp. 83-106, 2015, Available at SSRN: https://ssrn.com/abstract=2619449 or http://dx.doi.org/10.1111/manc.12102

David Cobham (Contact Author)

Heriot-Watt University - School of Management and Languages ( email )

Edinburgh EH14 4AS, Scotland
United Kingdom
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HOME PAGE: http://www.sml.hw.ac.uk/Staff_Profiles/DavidCobham.html

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