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Economic Theories on Inflation Targeting - Dictionary of Arguments

Mause I 233
Inflation Targeting/Monetary Policy/Economic Theories: in many countries there is a shift away from monetary policy strategies taking explicit interim targets into account. (VsTaylor, John Brian, VsMcCallum, Bennett).
Solution: in inflation targeting, central banks orientate their monetary policy directly towards inflation trends instead.
VsInflation Targeting: the central banks run the risk that their monetary policy measures may take effect too late and have a procyclical effect due to time lags. Against this background, central banks must gear their monetary policy interventions to the expected inflation potential, i.e. their strategy is based on a control of the forecast inflation rate.
As soon as the assumed inflation potential deviates from the formulated inflation target, monetary policy measures are required.
Problem: the credibility of monetary policy depends (...) crucially on the determination of the forecast inflation rate.
Solution: a combination with a Taylor-type monetary policy rule is proposed. See Taylor Rule/Taylor.

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Economic Theories
Mause I
Karsten Mause
Christian Müller
Klaus Schubert,
Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018

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