An Independent Review of Monetary Policy and Institutions in Norway

Abstract

The Centre for Monetary Economics (CME) at the Norwegian School of Management BI has for the third time invited a committee of economists for Norges Bank Watch, with the objective to evaluate the monetary-policy regime in Norway and Norges Bank’s conduct of monetary policy. The new committee for Norges Bank Watch 2002 consists of Professor Lars E.O. Svensson (chair), Princeton University, Chief Economist Kjetil Houg, Alfred Berg, Doctorate Student Haakon O.Aa. Solheim, Norwegian School of Management BI, and Professor Erling Steigum, Norwegian School of Management BI. The aim of Norges Bank Watch is to contribute to the general discussion on monetary policy and institutions among the political system, the academic community and other interested parties. Two years ago, Norges Bank Watch 2000 suggested that the Bank’s actual interpretation of its stable exchange-rate mandate should be formalized as a flexible inflation-targeting regime. In March 2001, the government introduced a formal inflation target regime. As was the case in last year’s report, we do not have the ambitions to suggest another major change of the system, but we hope to highlight important aspects of the present regime and we recommend a number of possible improvements of the regime.