Can Monetary Stabilization Policy Be Improved by CPI Futures Targeting? A Comment

Roger W Garrison and Lawrence White ()

Journal of Money, Credit and Banking, 1997, vol. 29, issue 4, 535-41

Abstract: Scott Sumner (and similarly Kevin Dowd) proposes to have the central bank write futures contracts on the Consumer Price Index, and automatically adjust the money stock in response to the public's net position in such contracts, as a way of improving the precision and credibility of monetary policy. The authors identify two serious problems that can be expected to render Sumner's proposal ineffective: (1) the public has no incentive to take a speculative position in the contracts until it is too late to adjust the money stock and (2) the central bank lacks an effective budget constraint. Copyright 1997 by Ohio State University Press.

Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:29:y:1997:i:4:p:535-41

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