Mechanisms for Achieving Monetary Stability : Inflation Targeting Versus the Erm

First, we modify the Barro-Gordon model so that a credibility-stabilization tradeoff will remain, even when a performance contract of the type envisaged by Walsh (1995) is imposed on the central bank governor. We do this by modeling a real interest rate bias along with the inflation bias. Then, we discuss how various inflation penalties might actually be imposed on a central bank, and ask whether "inflation targeting" supported by one or another of the penalties) is likely to bring a better resolution to the credibility-stabilization tradeoff than the ERM

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Year of publication:	1998
Authors:	Canzoneri, Matthew B. ; Nolan, Charles ; Yates, Anthony
Publisher:	[S.l.] : SSRN
Subject:	Inflationsbekämpfung \| Anti-inflation policy \| EU-Staaten \| EU countries \| Theorie \| Theory \| Geldpolitisches Ziel \| Monetary target \| Wechselkurs \| Exchange rate \| Inflationssteuerung \| Inflation targeting
Description of contents:	Abstract [papers.ssrn.com]