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Issues Concerning Nominal Anchors for Monetary Policy
Author:
Mr. Michael Mussa
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and
Mr. Robert P Flood
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Series:
IMF Working Papers
Volume/Issue:
Volume 1994: Issue 061
Language:
English
Publication Date:
01 May 1994
DOI:
https://doi.org/10.5089/9781451848106.001
ISBN:
9781451848106
ISSN:
1018-5941
Pages:
41
Keywords:
WP; inflation rate; price level; monetary policy; rate of inflation; United States price level; paper money; price-level result; inflation standard; economic system; Inflation; Nominal anchors; Conventional peg; Exchange rate arrangements; Exchange rates
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper presents a selective survey of issues relevant to the choice of nominal anchors for monetary policy. Section I reviews long price-level histories for the United Kingdom and United States, which reveal that the price level behaved very differently following WWII in these countries than it had done in previous post-war experiences. In particular following WWII the responsibilities of monetary policy expanded to encompass a business- cycle stabilization role and the nominal anchor shifted from the fixed anchor or price-level stability to the moving anchor of inflation-rate stability. The remaining sections of the paper review some of the considerations that are relevant to setting the average inflation rate in countries without a fixed nominal anchor.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund