Greater Monetary Policy Transparency for the G3: Lessons from Full-Fledged Inflation Targeters

27 Pages Posted: 12 Feb 2006

See all articles by Mark Stone

Mark Stone

International Monetary Fund (IMF)

Date Written: November 2003

Abstract

The experience of full-fledged inflation targeting (FFIT) countries is used here to shed light on the costs and benefits of greater monetary policy transparency for the G3. For the United States and the euro area, a hypothetical adoption of FFIT would incur a cost of less discretion while gaining the benefit of locking in a highly credible framework. The adoption of FFIT by Japan would create the risk of a further hit to credibility if policy was not able to end deflation. In practice, the G3 are already moving toward a new monetary regime that resembles FFIT in transparency, but not in accountability.

Keywords: monetary policy framework, inflation targeting, central bank

JEL Classification: E52, E58, E61

Suggested Citation

Stone, Mark, Greater Monetary Policy Transparency for the G3: Lessons from Full-Fledged Inflation Targeters (November 2003). IMF Working Paper No. 03/218, Available at SSRN: https://ssrn.com/abstract=880905

Mark Stone (Contact Author)

International Monetary Fund (IMF) ( email )

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Washington, DC 20431
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