Im Auftrag des Sozialministeriums Mecklenburg-Vorpommern wurde im Zeitraum zwischen dem 25. April und dem 15. Juni 2006 durch Prof. Dr. Jost W. Kramer und Diplom-Sozialverwaltungswirtin (FH) Monika Paßmann von der Hochschule Wismar, Forschungsstelle für Kooperation, Netzwerke und...

Recent literature on the design of optimal monetary policy has shown that deviations fromprice stability are small whenever prices are sticky. This paper reconsiders this issue byintroducing capital accumulation in the model. Optimal monetary policy in this setupimplies small deviations from...

There is a broad consensus that a central bank has to be independent of politics and that its primaryobjective is to ensure price stability. Financial crises, however, refuel the debate about the roles ofmonetary policy. This is because financial bubbles can also develop in a low-inflation...

[...]In my view, a goal of price stability requires thatmonetary policy be oriented beyond the horizon of itsimmediate impact on inflation and the economy. Thisimmediate horizon is on the order of two to three years.This orientation properly puts the focus of a forwardlookingpolicy on the time...

[...]The first intellectual development challenging the use ofan activist monetary policy to stimulate output and reduceunemployment is the finding, most forcefully articulatedby Milton Friedman, that the effects of monetary policyhave long and variable lags.1 The uncertainty of the timingand...

[...]In the case studies that follow, we will see that thedesign choices for an inflation-targeting regime fall intofour basic categories: definition and measurement of thetarget, transparency, flexibility, and timing.[...]

Many features of the German monetary targetingregime are also key elements of inflationtargeting in the other countries examined inthis study. Indeed, as pointed out in Bernanke and Mishkin(1997), Germany might best be thought of as a “hybrid”inflation targeter, in that it has more in common...

Our case studies indicate that both the adoption ofinflation targets and the design choices for thatframework have made a difference in the operationof monetary policy. The design choices of the targetingcountries have tended to converge over time withregard to the operational design questions...

In practice, central banks have been confronted with a trade-off between stabilising inflation and output when dealing with rising oil prices. This contrasts with the result in the standard New Keynesian model that ensuring complete price stability is the optimal thing to do, even when an oil...