Inflation Targeting after the Crisis. The Past, Present and Future of Monetary Policy


Seminar Paper, 2012

10 Pages, Grade: 7,5 (out of 10)


Abstract or Introduction

For more than two decades has inflation targeting been shaping monetary policy. Inflation has successfully been brought down and stabilized. However, financial imbalances have arisen at the same time, resulting in the Great Recession that major economies are still struggling with. Monetary policy seems to have been overemphasizing price stability while underestimating the risks of financial imbalances. Even before the crisis did research point to this problem, but – as history teaches us – it does usually take events with major impact on the understanding of the economy for these to be decisively addressed. It seems legitimate to argue that the Great Recession is such an event. It is therefore of great importance to analyze possible consequences concerning monetary policy and inflation targeting in particular.

The first section gives a brief history of monetary policy that shows how it has evolved over time and how economic events initiated major changes. Section 2 presents the concept of inflation targeting and how the lessons of history have been implemented into this policy framework. Section 3 discusses the shortcomings of inflation targeting that were revealed by the Great Recession and introduces several suggestions for modification that address these shortcomings

Details

Title
Inflation Targeting after the Crisis. The Past, Present and Future of Monetary Policy
College
Maastricht University
Course
Macroeconomic Policy in Europe
Grade
7,5 (out of 10)
Author
Year
2012
Pages
10
Catalog Number
V285239
ISBN (eBook)
9783656855743
ISBN (Book)
9783656855750
File size
399 KB
Language
English
Keywords
economic policy, monetary policy, inflation targeting, Great Recession, financial imbalances
Quote paper
Matthias Runkel (Author), 2012, Inflation Targeting after the Crisis. The Past, Present and Future of Monetary Policy, Munich, GRIN Verlag, https://www.grin.com/document/285239

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