Talk:Inflation targeting

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Numbers[edit]

What are the specific targets of each of the countries using inflation targeting monetary policies? DOR (HK) (talk) 08:17, 19 June 2008 (UTC)[reply]

The Bank of England provides possibly the best resource on inflation targeting internationally.
http://www.bankofengland.co.uk/education/ccbs/handbooks/ccbshb29.htm
This source is up-to-date and includes a rigorous view of all formal target countries. — Preceding unsigned comment added by 194.66.70.254 (talk) 13:37, 14 February 2012 (UTC)[reply]

Dubious claim removed[edit]

I removed this sweeping, unreferenced claim:

The downturn in the real economy of the USA in late 2008 was in large part an outcome of inflation targeting, and is exactly what the dynamic-strategy theory predicts.

-- Beland (talk) 21:33, 1 March 2010 (UTC)[reply]


American Action Outdated[edit]

Does the FOMC Dec 2012 announcement count as inflation targeting? I'm not sure, but if so, it should be mentioned in last paragraph of Debate and in History section. Pfornia (talk) 19:59, 14 March 2013 (UTC)[reply]

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Dr. Sanchez-Fung's comment on this article[edit]

Dr. Sanchez-Fung has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:


In the section countries, please update as follows:

The Dominican Republic has been operating an inflation-targeting regime since 2012.


Source: http://www.bancentral.gov.do/documentos_varios/Esquema_de_Metas_de_Inflación.pdf.


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  • Reference : Sanchez-Fung, Jose R, 2003. "Inflation targeting and monetary analysis in Chile and Mexico," Royal Economic Society Annual Conference 2003 179, Royal Economic Society.

ExpertIdeasBot (talk) 21:46, 30 May 2016 (UTC)[reply]

Dr. Nautz's comment on this article[edit]

Dr. Nautz has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:


Very appropriate.


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  • Reference : Gunda-Alexandra Detmers & Dieter Nautz, 2014. "Stale Forward Guidance," SFB 649 Discussion Papers SFB649DP2014-027, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.

ExpertIdeasBot (talk) 09:19, 16 June 2016 (UTC)[reply]

Dr. Wyplosz's comment on this article[edit]

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It could be noted that a more precise name is "expected inflation targeting" since central banks set a goal for inflation a couple of years down the road, as correctly indicated.

The section "Theoretical questions" is more confusing than helpful. There are many models that describe how the strategy is meant to work, most of them in the New Keynesian tradition. The discussion on the limits of economic models and on econometric issues is not helpful, even though some health warning is always welcome. This one is a bit nihilist.

The US Fed is officially not an inflation targeter because it has received from the Congress dual mandate, stability of the currency and high level of employment. In practice, it acts as an expected inflation targeter, as does the ECB, but with many provisos that deserve being presented. Why is the Czech Republic, a (successful) latecomer singled out? The section on emerging markets is too succinct and cryptic.

More on what is meant constrained discretion would be welcome.

Larry Ball has been criticizing the ubiquitous 2% for being too low. There is no discussion about what happens when the zero lower bound is reached.

The section on shortcomings focus on one alternative (nominal income targeting) ignoring others (Taylor rule, monetary aggregate targeting, price level targeting), dedicating much space to minor contributors. It does not acknowledge the vast empirical literature on the strategy's performance.

The reference list to a vast literature is not selective, it looks rather random. It includes some of the usually quoted contributions alongside less obviously essential ones that mix up newspaper and unknown articles.


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  • Reference : Pierre Gosselin, Aileen Lotz and Charles Wyplosz, 2007. "Interest Rate Signals and Central Bank Transparency," IHEID Working Papers 19-2007, Economics Section, The Graduate Institute of International Studies, revised Aug 2007.

ExpertIdeasBot (talk) 18:23, 27 June 2016 (UTC)[reply]

Dr. Dai's comment on this article[edit]

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1) "Inflation targeting is a monetary policy in which" should be "Inflation targeting is a monetary policy regime in which"

2) The section "Theoretical questions" is obscure and does explain how inflation targeting works. This section should be rewritten and takes into account the contributions of main researchers in the inflation targeting literature. Moreover, inflation targeting is generally studied in Aggregate Demand and Supply model (with a Phillips curve and an IS equation) or New-Keynesian models, these models do not correspond to "New Classical Macroeconomics". I recommend using Frederic Mishkin and Lars Svensson to write this section.

3) "Contrast to the usual inflation rate targeting, Laurence Ball proposed targeting on long-run inflation, targeting which takes the exchange rate into account and monetary conditions index targeting." to be changed on "In contrast to the usual inflation rate targeting, Laurence Ball proposed targeting on long-run inflation and using monetary conditions index as instrument."

Indeed, the term "monetary conditions index targeting" is rarely used, 3 in google search, including the one by Wikipedia.


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  • Reference 1: Meixing DAI, 2010. "Financial market imperfections and monetary policy strategy," Working Papers of BETA 2010-19, Bureau d'Economie Theorique et Appliquee, UDS, Strasbourg.
  • Reference 2: Meixing DAI & Moise SIDIROPOULOS, 2009. "Money growth rule and macro-financial stability under inflation-targeting regime," Working Papers of BETA 2009-05, Bureau d'Economie Theorique et Appliquee, UDS, Strasbourg.
  • Reference 3: Meixing Dai & Qiao Zhang, 2013. "Central bank transparency with the cost channel," Working Papers of BETA 2013-06, Bureau d'Economie Theorique et Appliquee, UDS, Strasbourg.

ExpertIdeasBot (talk) 18:29, 27 June 2016 (UTC)[reply]

Dr. Altug's comment on this article[edit]

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This is a very well done entry. I don't have further comments. My rating is Excellent.


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  • Reference : Sumru Altug & Cem Cakmakli, 2014. "Inflation Targeting and Inflation Expectations: Evidence for Brazil and Turkey," Koc University-TUSIAD Economic Research Forum Working Papers 1413, Koc University-TUSIAD Economic Research Forum.

ExpertIdeasBot (talk) 20:34, 1 July 2016 (UTC)[reply]

Dr. Siklos's comment on this article[edit]

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The Bank of England's Monetary Policy Committee was given sole responsibility in 1998 for setting interest rates to meet the Government's Retail Prices Index (RPI) inflation target of 2.5%.[6].

The text jumps from NZ to the UK. There should be a transition to explain that IT then spread to other advanced economies in the 1990s and began to spread to emerging markets beginning in the 2000s. Since the inception of the euro in January 1999, the objective of the European Central Bank (ECB) has been to maintain price stability within the Eurozone.[8] The Governing Council of the ECB in October 1998[9] defined price stability as inflation of under 2%, “a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%” and added that price stability ”was to be maintained over the medium term”.[10] The Governing Council confirmed this definition in May 2003 following a thorough evaluation of the ECB's monetary policy strategy. On that occasion, the Governing Council clarified that “in the pursuit of price stability, it aims to maintain inflation rates below, but close to, 2% over the medium term”.[9] Since then, the numerical target of 2% has become common for major developed economies, including the United States (since January 2012) and Japan (since January 2013).[11]

The only problem is that the ECB does not consider itself an IT central bank (nor does the Swiss National Bank for that matter nor the US Fed). Perhaps its preferable to state that other central banks care about price stability but go about it in different ways without explicitly referring themselves as IT central banks. In the US's case its because of the dual mandate, and so on.

There is some empirical evidence that inflation targeting does what its advocates claim,[12] that is, making the outcomes, if not the process, of monetary policy more transparent. There is a large literature on this so the citation is a poor one. Perhaps you can citeInflation Targeting: Lessons from the International Experience Ben S. Bernanke, Thomas Laubach, Frederic S. Mishkin, & Adam S. Posen

Paperback


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  • Reference : Matthias Neuenkirch & Pierre Siklos, 2013. "How Monetary Policy is Made: Two Canadian Tales," MAGKS Papers on Economics 201341, Philipps-Universitat Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

ExpertIdeasBot (talk) 15:22, 11 July 2016 (UTC)[reply]

Dr. Hughes Hallett's comment on this article[edit]

Dr. Hughes Hallett has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:


paragraph 2:"... respectively. On the basis of both standard economic models and practical observation, the conventional wisdom....."

History section, end para 3, new para: "...explaining why, and how he will remedy the situation. This example introduces a distinction between point targeting, as practiced in the early days in New Zealand or Chile where the Central Bank tries to achieve specific values for inflation, and interval targeting as practiced in the Bank of England and implicitly in the ECB or Fed, where policymakers try to remain within a specified interval around the given target. In addition, given the inevitable delays before the impacts of a policy change will materialise, most countries in fact target their policies to achieve the desired inflation rate as projected two years ahead - rather than current inflation (which would be to close the barn door after the horse had bolted).

After "Theoretical Questions" section: New Section "Institutional Framework" "In their review of inflation targeting, Bernanke and Mishkin [reference 42] go to great lengths to stress that inflation targeting is a general framework for policy, not a particular policy rule.This underlines the fact that inflation targeting can be used with any rule to make the necessary policy adjustments, although a likely candidate in practice is a Taylor rule because that allows to policymakers to take account of their actions on output (or other targets of policy) as well as inflation - albeit with a smaller (relative) weight. But to do that requires the rule in question to be made explicit, along with the model being used to forecast inflation, and the data and assumptions which underlie those projections. Thus, treating inflating targeting as a framework as opposed to the application of a policy rule forces a degree of transparency, accountability and good communication into the process of policy making - and thereby make the judgments involved explicit - all important features which allow the policy institutions to build up credibility and commitment for their policies.

End section "Benefits": "....36 emerging economies from 1979 to 2009[18]. The corresp-onding results for the developed economies generally show greater stability, due to the ability to generate greater credibility when you have an explicit and more predictable policy framework in place."

End para 1 in section "shortcomings": "... too much output volatility.[20][21]. That said, nominal income targeting is just a special case of a Taylor rule in an inflation targeting framework where the coefficients on inflation and output are fixed equal and cannot be changed.[50]

extra reference [50]

Hughes Hallett, A. (2015) "Is nominal GDP targeting a suitable tool for ECB monetary policy?" at http://www.europarl.europa.eu/committees/en/econ/monetary-dialogue.html


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  • Reference : Hughes Hallett, Andrew & Libich, Jan & Stehlik, Petr, 2007. "Monetary and Fiscal Policy Interaction with Various Degrees and Types of Commitment," CEPR Discussion Papers 6586, C.E.P.R. Discussion Papers.

ExpertIdeasBot (talk) 15:34, 24 August 2016 (UTC)[reply]

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