Inflation targeting as a monetary policy rule

The purpose of the paper is to survey and discuss inflation targeting in the context of monetary policy rules. The paper provides a general conceptual discussion of monetary policy rules, attempts to clarify the essential characteristics of inflation targeting, compares inflation targeting to the other monetary policy rules, and draws some conclusions for the monetary policy of the European system of Central Banks

Monetary and Fiscal Policy Dynamics in an Asymmetric Monetary Union

This paper investigates the dynamic effects of monetary and fiscal policy in a monetary union, which is characterized by asymmetric interest rate transmission. This asymmetry gives rise to intertemporal reversals in the relative effectiveness of policy on member country outputs. The direction and the number of these reversals depend on whether policies are unanticipated or anticipated. We also study the coordination between monetary and fiscal policy in a monetary union. Monetary policy may completely stabilize European output after unanticipated fiscal policy shocks. With anticipated fiscal policy shocks, complete stabilization throughout the overall adjustment process requires monetary policy to be time-inconsistent.European Monetary Union, Fiscal Policy, Monetary Policy, Policy Coordination

Monetary Policy

.Monetary Policy, Economic Policies, MDGs, Povery, Research, Programme

Monetary and fiscal policy dynamics in an asymmetric monetary union

This paper investigates the dynamic effects of monetary and fiscal policy in a monetary union, which is characterized by asymmetric interest rate transmission. This asymmetry gives rise to intertemporal reversals in the relative effectiveness of policy on member country outputs. The direction and the number of these reversals depend on whether policies are unanticipated or anticipated. We also study the coordination between monetary and fiscal policy in a monetary union. Monetary policy may completely stabilize European output after unanticipated fiscal policy shocks. With anticipated fiscal policy shocks, complete stabilization throughout the overall adjustment process requires monetary policy to be time-inconsistent. --European Monetary Union,fiscal policy,monetary policy,policy coordination,spillover effects,time inconsistency

Monetary Policy in China (1994-2004) : Targets, Instruments and their Effectiveness

China's monetary policy disposes of two sets of monetary policy instruments: Instruments of the central bank, the People's Bank of China (PBC) and non-monetary policy instruments. Additionally, the PBC's instruments include price-based indirect and quantity-based direct instruments. The simultaneous usage of these instruments leads to various distortions that ultimately prevent the interest rate channel of monetary transmission from functioning. Moreover, the strong influences of quantity-based direct instruments and non-monetary policy instruments question the approach of indirect monetary policy in general. --China,monetary policy strategies,monetary policy instruments

The transmission of monetary policy shocks

Commonly used instruments for the identification of monetary policy disturbances are likely to combine the true policy shock with information about the state of the economy due to the information disclosed through the policy action. We show that this signalling effect of monetary policy can give rise to the empirical puzzles reported in the literature, and propose a new high-frequency instrument for monetary policy shocks that accounts for informational rigidities. We find that a monetary tightening is unequivocally contractionary, with deterioration of domestic demand, labor and credit market conditions, as well as of asset prices and agents' expectations

Inflation Targets and Debt Accumulation in a Monetary Union

This paper explores the interaction between centralized monetary policy and decentralized fiscal policy in a monetary union. Discretionary monetary policy su¤ers from a failure to commit. Moreover, decentralized fiscal policymakers impose externalities on each other through the influence of their debt policies on the common monetary policy. These imperfections can be alleviated by adopting state-contingent in‡ation targets (to combat the monetary policy commitment problem) and shock-contingent debt targets (to internalize the externalities due to decentralized fiscal policy).discretionary monetary policy;decentralized fiscal policy;monetary union;in‡ation targets;debt targets