Towards a New Monetary-Macroprudential Policy Framework: Perspectives on Integrated Inflation Targeting: A Discussion

Barry Eichengreen

Chapter 31 in Macro-financial Stability Policy in a Globalised World: Lessons from International Experience:Selected Papers from the Asian Monetary Policy Forum 2021 Special Edition and MAS-BIS Conference, 2023, pp 674-677 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Inflation targeting is in vogue in emerging markets. Why is clear to see. Inflation targeting as currently practised has its limitations, but it is the “least-worst alternative” for central banks requiring a monetary anchor. And every central bank requires a monetary anchor. Exchange rate pegs are fragile, especially in the presence of an open capital account, where emerging markets as a class are moving in the direction of greater capital-account openness. Monetary targets are unreliable, as historical experience has amply shown. However, having no anchor or well-articulated monetary policy strategy is not a viable option. So a growing number of central banks are led to some variant of inflation targeting by process of elimination…

Keywords: Macro-financial Policy; Policy Framework; Macroprudential Policy; Monetary Policy; Fiscal Policy; Capital Flow Management Measure; Capital Control; Foreign Exchange Intervention; Integrated Policies; Multiple Policies; Policy Trade-off; Policy Substitute; Policy Complement; Policy Interaction; Policy Space; Central Bank; International Spillovers; Spillbacks; Sending Country; Receiving Country; Financial Channel; Financial Regulation; Financial Stability; External Stability; Advanced Economy; Emerging Market Economy; Capital Flow; Portfolio Flow; Banking Flow; Exchange Rate; Banking System; Non-bank Financial Institution; United Kingdom; Sweden; China; Hong Kong Sar; India; Indonesia; Korea; Singapore; Latin America; Croatia (search for similar items in EconPapers)
JEL-codes: E E52 E58 E6 F F01 F3 F38 (search for similar items in EconPapers)
Date: 2023
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