Talk:Inflation targeting

Dr. Siklos's comment on this article

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

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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We believe Dr. Siklos has expertise on the topic of this article, since he has published relevant scholarly research:

• 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)

Dr. Hughes Hallett's comment on this article

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

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Hughes Hallett has expertise on the topic of this article, since he has published relevant scholarly research:

• 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)

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