Can, or should, a central bank inflation target?

Paul Davidson

Journal of Post Keynesian Economics, 2006, vol. 28, issue 4, 689-703

Abstract: Classical theory monetarists assumed the quantity theory's equation of exchange gave the central bank direct control of inflation via an exogenous money supply. After Milton Friedman's "natural rate of unemployment" thesis, classical theory recognized that inflation targeting could only be achieved by affecting the unemployment rate. Keynes's theory argues that the central bank can target inflation only via installing an "incomes policy of fear."

Date: 2006
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Chapter: Can, or Should, a Central Bank Inflation Target? (2007)
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DOI: 10.2753/PKE0160-3477280409

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