Inflation targeting in the context of the current financial crisis

Daniela Gerogeta Beju and Angela Maria Filip
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Angela Maria Filip: Babes-Bolyai University Cluj-Napoca

Finante - provocarile viitorului (Finance - Challenges of the Future), 2009, vol. 1, issue 10, 161-167

Abstract: Starting with the 90, price stability became an increasingly important goal of the monetary authorities in many countries for at least two reasons. Firstly, central bank is the institution responsable for ensuring price stability in the long-run. Secondly, monetary policy can stimulate economic growth and employment in the long-run principally by maintaining inflation under control. Thus, the monetary policy strategy which targets inflation directly – inflation targeting – gained a growing importance, being adopted in several developed contries, but also in many emerging economies. Untill now, the inflation targeting proved to be a successful strategy, permitting inflation targeters to reduce inflation to low levels. In this article we discuss the pre-crisis view of inflation targeting, laying out the strong points and the weak points of this strategy. We also comment the extent in which monetary policy has any contribution to the current financial crisis. Finally, we try to answer to the question if inflation tageting should suffer changes under the impact of the current financial crisis.

Keywords: monetary policy; inflation targeting; financial crisis (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 G01 (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:aio:fpvfcf:v:1:y:2009:i:10:p:161-167

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