Multiple objectives in monetary policy: a de facto analysis for ‘advanced’ countries

David Cobham

No 1507, Heriot-Watt University Economics Discussion Papers from Department of Economics, School of Management and Languages, Heriot Watt University

Abstract: A statistical methodology is developed by which realised outcomes can be used to identify, for calendar years between 1974 and 2012, when policymakers in ‘advanced’ economies have successfully pursued single objectives of different kinds, or multiple objectives. A simple criterion is then used to distinguish between multiple objectives pure and simple and multiple objectives subject to a price stability constraint. The overall and individual country results which this methodology produces seem broadly plausible. Unconditional and conditional analyses of the inflation and growth associated with different types of objectives reveal that multiple objectives subject to a price stability constraint are associated with roughly as good economic performance as the single objective of inflation. A proposal is then made as to 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.

JEL-codes: E52 E58 F33 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (1)

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Working Paper: Multiple Objectives in Monetary Policy: A de Facto Analysis for ‘Advanced’ Countries (2015)
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