During the past 7 years, an increasing number of countries have turned to the announcement of explicit inflation targets as a crucial element of the implementation of monetary policy. In this document, we review the experience of some of these countries and derive some lessons to be considered...

First, we modify the Barro-Gordon model so that a credibility-stabilization tradeoff will remain, even when a performance contract of the type envisaged by Walsh (1995) is imposed on the central bank governor. We do this by modeling a real interest rate bias along with the inflation bias. Then,...

Central banks often make announcements even though, in models in which dynamic time inconsistency of optimal policy plays a role, they have an incentive to lie. This paper studies the way inflation targeting affects the incentives the central bank faces in announcing its target inflation rate...