Inflation Targeting: A Critical Appraisal

Levy Economics Institute Working Paper No. 388

31 Pages Posted: 7 Jan 2004

See all articles by Philip Arestis

Philip Arestis

University of Cambridge - Department of Land Economy; Universidad del País Vasco (UPV/EHU)

Malcolm C. Sawyer

Levy Economics Institute

Date Written: September 2003

Abstract

Since the early 1990s, a number of countries have adopted Inflation Targeting (IT) in an effort to reduce inflation. Most literature has praised IT as a superior framework of monetary policy. We suggest that IT is a major policy prescription closely associated with the New Consensus Macroeconomics (NCM). Focusing mainly on the IT aspects of the NCM, we address and assess the theoretical foundations of IT, and then assess the empirical work on IT, distinguishing between work that utilizes structural macroeconomic models and work based on single-equation techniques. The IT theoretical framework and the available empirical evidence do not appear to support the views of IT proponents.

JEL Classification: E31, E52

Suggested Citation

Arestis, Philip and Sawyer, Malcolm C., Inflation Targeting: A Critical Appraisal (September 2003). Levy Economics Institute Working Paper No. 388. Available at SSRN: https://ssrn.com/abstract=447761 or http://dx.doi.org/10.2139/ssrn.447761

Philip Arestis (Contact Author)

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

Universidad del País Vasco (UPV/EHU)

Barrio Sarriena s/n
Leioa, Bizkaia 48940
Spain

Malcolm C. Sawyer

Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States
845-758-7700 (Phone)
845-758-1149 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
709
Abstract Views
2,274
rank
34,604
PlumX Metrics