The paper derives the monetary policy reaction function implied by money growth targeting. It consists of an interest rate response to deviations of the inflation rate from target, to the change in the output gap, to money demand shocks and to the lagged interest rate. In the second part, it is...

The present paper uses survey data on expected consumer price developments to analyse the role of inflation expectations in the inflation process. The survey measures of price expectations are derived from the European Commission's Consumer Survey and from the surveys of professional experts...