Successes and Failures of Monetary Policy Since the 1950s

David Laidler ()

No 20072, University of Western Ontario, RBC Financial Group Economic Policy Research Institute Working Papers from University of Western Ontario, RBC Financial Group Economic Policy Research Institute

Abstract: Successes and failures in monetary policy stem mainly from coherence or lack thereof in the monetary order, rather than the tactical skills of policy makers. Crucial here are questions of consistency among the economic ideas that the policy regime embodies, the way in which the economy actually functions, and the beliefs of private agents and policy makers about these matters. These postulates are used to frame accounts of the Bretton Woods System and its collapse, the Great Inflation that followed, the subsequent disappointing performance of money-growth targeting, the breakdown of the Japanese "bubble economy" the onset of theEMS crisis at the beginning of the 1990s, and since then, the launch of the Euro and the apparent success of inflation targeting. Though monetary policy seems rather successful at present, certain weaknesses in currently prevailing monetary orders are noted.

Keywords: monetary policy; policy regimes; crises; pegged exchange rates; flexible exchange rates; inflation; inflation targets; money supply; central banks, central bank independence. (search for similar items in EconPapers)
JEL-codes: E42 E58 E65 F33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-his, nep-hpe, nep-mac, nep-mon and nep-pke
Date: 2007
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