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The Inflation-Targeting Debate$
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Ben S. Bernanke and Michael Woodford

Print publication date: 2005

Print ISBN-13: 9780226044712

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226044736.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 19 September 2021

What Has Inflation Targeting Achieved?

What Has Inflation Targeting Achieved?

(p.11) 1 What Has Inflation Targeting Achieved?
The Inflation-Targeting Debate

Mervyn King

University of Chicago Press

The United Kingdom went through a postwar period of first stop/go and then three severe recessions. Since 1992, inflation has been consistently below 4 percent, and in fact has averaged a fraction under 2.5 percent of the British target for the past ten years. Inflation has been low and stable. Unemployment came down from double-digit levels to 5 percent. And there have been forty-two consecutive quarters of positive economic growth. But the question is, was inflation targeting necessary to that achievement? This chapter makes four key points. One is about constrained discretion and inflation expectations. A second is about inflation targeting and the committee process itself. A third is about transparency and accountability, and a fourth is the claim that inflation targeting does not give all the answers. That is, there are many difficult aspects of the economic outlook that are all about serious economics and discussing what is likely to happen in the future, but that are made no easier by having an inflation-targeting framework than they would be by any other framework.

Keywords:   United Kingdom, inflation, inflation targeting, economic growth, discretion, transparency, accountability

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