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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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Inflation Targeting in the United States?

Inflation Targeting in the United States?

(p.311) 8 Inflation Targeting in the United States?
The Inflation-Targeting Debate

Marvin Goodfriend

University of Chicago Press

In what sense can monetary policy as currently practiced by the U.S. Federal Reserve be characterized as inflation targeting? And what, if any, features of an inflation-targeting policy regime should the Fed adopt more formally? This chapter addresses these questions. It first describes the origins of the case for price stability in the United States by reviewing postwar monetary policy as practiced by the Fed and enumerating the problems created by failing to make price stability a priority. In particular, it discusses the inflationary go/stop era and the disinflation under Fed Chairman Paul Volcker, and describes the ways in which monetary policy as conducted under Chairman Alan Greenspan can be characterized as implicit inflation targeting. Finally, the chapter suggests how to make the Fed's inflation-targeting procedures explicit in order to secure the commitment to low inflation, enhance transparency, and improve the Fed's accountability for attaining its monetary policy objectives.

Keywords:   Federal Reserve, inflation targeting, monetary policy, United States, price stability, disinflation, Alan Greenspan, Paul Volcker

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