Inflation and Growth Targeting

Pui Chi Ip ()
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Pui Chi Ip: Department of Economics, Macquarie University

No 401, Research Papers from Macquarie University, Department of Economics

Abstract: Inflation targeting needs to be supplemented by an economic growth target so that central banks will not adopt monetary policy which results in stagnation. There is no guarantee that the economy will move towards full employment by itself when the inflation rate is kept between two to three per cent. Monetary policy does not have a comparative advantage in achieving price stability. Svensson's proposal that the Keynesian interest rate channel and the Phillips curve can be exploited by the monetary authority for the purpose of inflation targeting may not work. The R in NAIRU should stand for "range" not "rate".

Keywords: Inflation; Economic Growth; Monetary Policy (search for similar items in EconPapers)
JEL-codes: E24 E31 E52 E60 (search for similar items in EconPapers)
Pages: 24 pages.
Date: 2004-03
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