Inflation Targeting in Western Europe

32 Pages Posted: 6 Jul 2005

See all articles by Antonio Moreno

Antonio Moreno

School of Economics and Business, University of Navarra

Luis Rey

University of Navarra - Faculty of Economics and Business

Date Written: June 23, 2005

Abstract

Several European countries adopted inflation targeting as a monetary policy strategy during the 1990s. We evaluate the impact of the establishment of this policy framework on the dynamics of inflation for three countries: United Kingdom, Spain and Finland. We find that inflation targeting was not the most important factor behind the decline of their monthly and quarterly inflation volatilities throughout the 90s. The existence of more benign macroeconomic shocks during this period was more important in such decline. We find however that, in the case of the United Kingdom, the more aggressive monetary policy stance against inflation during the inflation targeting period was the most important factor behind the decline in the volatility of trend inflation.

Keywords: Inflation Targeting, Europe, Central Bank Policy, Structural Analysis, Shocks, Propagation

JEL Classification: E31, E32, E42, E58

Suggested Citation

Moreno, Antonio and Rey, Luis, Inflation Targeting in Western Europe (June 23, 2005). Available at SSRN: https://ssrn.com/abstract=753324 or http://dx.doi.org/10.2139/ssrn.753324

Antonio Moreno (Contact Author)

School of Economics and Business, University of Navarra ( email )

Ed. Amigos
Pamplona, Navarra 31009
Spain

Luis Rey

University of Navarra - Faculty of Economics and Business ( email )

Campus Universitario
Pamplona, Navarra 31009
Spain

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