Lessons for monetary policy: What should the consensus be?

Arbeitspapier

This paper outlines important lessons for monetary policy. In particular, the role of inflation targeting, which was much acclaimed prior to the financial crisis and since then has not lost much of its endorsement, is critically reviewed. Ignoring the relation between monetary policy and asset prices, as is the case in this monetary policy approach, can lead to financial instability. In contrast, giving, inter alia, monetary factors a role in central banks' policy decisions, as is done in the ECB's encompassing approach, helps prevent these potentially harmful side effects and thus allows for fostering financial stability. Finally, this paper makes a case against increasing the central banks' inflation target.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CFS Working Paper ; No. 2011/13

Classification and Topics

• Classification: Wirtschaft ; Financial Markets and the Macroeconomy ; Monetary Policy ; Central Banks and Their Policies
• Subject: Inflation Targeting ; Asset Prices ; Financial Stability ; ECB ; Inflation Targeting ; Geldpolitisches Ziel ; Zentralbank ; EU-Staaten ; Geldpolitik

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Issing, Otmar
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, Center for Financial Studies (CFS)
• (where): Frankfurt a. M.
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/57360
• URN: urn:nbn:de:hebis:30-90426
• Last update: 10.03.2025, 11:41 AM CET