Inflation targeting as a way of pre-commitment

Herrendorf, Berthold (1998) Inflation targeting as a way of pre-commitment. Oxford Economic Papers, 50, (3), 431-448.


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This paper considers an institutional arrangement in which the government assigns a publicly-announced inflation target to an instrument-independent central bank, but retains the discretion to revise the inflation target after wages have been set. We argue that since this arrangement is transparent, it solves Canzonen's private information problem, ensures perfect monitoring of the government, and makes reputauonal forces more effective Cases are characterized in which, for this reason, inflation targeting mitigates the inflationary bias of monetary policy.

Item Type: Article
ISSNs: 0030-7653 (print)
Related URLs:
Subjects: H Social Sciences > HB Economic Theory
J Political Science > JF Political institutions (General)
Divisions : University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 33450
Accepted Date and Publication Date:
July 1998Published
Date Deposited: 14 Dec 2007
Last Modified: 27 Mar 2014 18:20

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