Inflation Targeting: A Critical Appraisal

Philip Arestis

Economics Working Paper Archive from Levy Economics Institute, The

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.

New Economics Papers: this item is included in nep-mon
Date: 2003-09
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Working Paper: Inflation Targeting: A Critical Appraisal (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:lev:wrkpap:388

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