Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- 1 Introduction
- 2 Welcome remarks: a Norwegian perspective
- 3 Reflections on inflation targeting
- 4 Inflation targeting at twenty: achievements and challenges
- 5 Inflation targeting twenty years on: where, when, why, with what effects and what lies ahead?
- 6 How did we get to inflation targeting and where do we need to go to now? A perspective from the US experience
- 7 Inflation control around the world: why are some countries more successful than others?
- 8 Targeting inflation in Asia and the Pacific: lessons from the recent past
- 9 Inflation targeting and asset prices
- 10 The optimal monetary policy instrument, inflation versus asset price targeting, and financial stability
- 11 Expectations, deflation traps and macroeconomic policy
- 12 Heterogeneous expectations, learning and European inflation dynamics
- 13 Inflation targeting and private sector forecasts
- 14 Inflation targeting, transparency and inflation forecasts: evidence from individual forecasters
- 15 Gauging the effectiveness of quantitative forward guidance: evidence from three inflation targeters
- 16 Macro-modelling with many models
- 17 Have crisis monetary policy initiatives jeopardised central bank independence?
- 18 Inflation targeting: learning the lessons from the financial crisis
- 19 The financial crisis as an opportunity to strengthen inflation-targeting frameworks
- 20 ‘Leaning against the wind’ is fine, but will often not be enough
- 21 Inflation targeting, capital requirements and ‘leaning against the wind’: some comments
- Index
17 - Have crisis monetary policy initiatives jeopardised central bank independence?
Published online by Cambridge University Press: 05 October 2010
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- 1 Introduction
- 2 Welcome remarks: a Norwegian perspective
- 3 Reflections on inflation targeting
- 4 Inflation targeting at twenty: achievements and challenges
- 5 Inflation targeting twenty years on: where, when, why, with what effects and what lies ahead?
- 6 How did we get to inflation targeting and where do we need to go to now? A perspective from the US experience
- 7 Inflation control around the world: why are some countries more successful than others?
- 8 Targeting inflation in Asia and the Pacific: lessons from the recent past
- 9 Inflation targeting and asset prices
- 10 The optimal monetary policy instrument, inflation versus asset price targeting, and financial stability
- 11 Expectations, deflation traps and macroeconomic policy
- 12 Heterogeneous expectations, learning and European inflation dynamics
- 13 Inflation targeting and private sector forecasts
- 14 Inflation targeting, transparency and inflation forecasts: evidence from individual forecasters
- 15 Gauging the effectiveness of quantitative forward guidance: evidence from three inflation targeters
- 16 Macro-modelling with many models
- 17 Have crisis monetary policy initiatives jeopardised central bank independence?
- 18 Inflation targeting: learning the lessons from the financial crisis
- 19 The financial crisis as an opportunity to strengthen inflation-targeting frameworks
- 20 ‘Leaning against the wind’ is fine, but will often not be enough
- 21 Inflation targeting, capital requirements and ‘leaning against the wind’: some comments
- Index
Summary
These are extraordinary times for central banks. The wish that central bankers might become seen as useful, but boring, technocrats, rather like dentists, seems all too far from realisation. Let me start by reminding you that all the really serious financial crises have occurred in the aftermaths of periods of great economic success, and at times when inflation was not a serious issue, as, for example, in the United States in 1929, Japan in 1990/1 and almost everywhere in 2007/8. Before then, in the nineteenth century, crises often followed overexpansion on the basis of great technological breakthroughs, such as canals and railways, which had the effect of lowering prices. There are, indeed, good reasons, as Minsky has pointed out, why crises should follow overconfidence, as nemesis follows hubris.
The point of this, however, is to emphasise that successful control of goods and services inflation does not carry with it any assuredness of limiting, or even much mitigating, asset price bubbles and busts; and this would, I fear, remain so even if housing prices were to be correctly included in the inflation index, as should be done.
Achieving low and stable inflation does remain the priority, but it cannot be the be-all and end-all of a central bank's remit. This realisation has led to two different proposals. The first is to adjust central bank reaction functions so as to have them ‘lean against the wind’ of asset price bubbles and busts.
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- Information
- Twenty Years of Inflation TargetingLessons Learned and Future Prospects, pp. 419 - 423Publisher: Cambridge University PressPrint publication year: 2010