Current Issues in the Design and Conduct of Monetary Policy

18 Pages Posted: 28 Jan 2006  

Mohsin S. Khan

International Monetary Fund (IMF)

Date Written: March 2003

Abstract

Movements in global capital during the late 1990s and the greater emphasis on price stability led many countries to abandon fixed exchange rate regimes and to design institutions and monetary policies to achieve credibility in the goal of lowering inflation. Such recent developments have brought to the forefront the idea that freely mobile capital, independent monetary policy, and fixed exchange rates form an "impossible trinity." It is possible to have two of these policies, but not all three. Inflation-targeting regimes being adopted by many countries provide a way of resolving this dilemma.

Keywords: monetary policy rules versus discretion inflation targeting

JEL Classification: E42 E52

Suggested Citation

Khan, Mohsin S., Current Issues in the Design and Conduct of Monetary Policy (March 2003). IMF Working Paper, Vol. , pp. 1-18, 2003. Available at SSRN: https://ssrn.com/abstract=879131

Mohsin S. Khan (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-4518 (Phone)
202-623-6440 (Fax)

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