IMF Working Papers

Issues Concerning Nominal Anchors for Monetary Policy

By Michael Mussa, Robert P Flood

May 1, 1994

Preview Citation

Format: Chicago

Michael Mussa, and Robert P Flood. Issues Concerning Nominal Anchors for Monetary Policy, (USA: International Monetary Fund, 1994) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper presents a selective survey of issues relevant to the choice of nominal anchors for monetary policy. Section I reviews long price-level histories for the United Kingdom and United States, which reveal that the price level behaved very differently following WWII in these countries than it had done in previous post-war experiences. In particular following WWII the responsibilities of monetary policy expanded to encompass a business- cycle stabilization role and the nominal anchor shifted from the fixed anchor or price-level stability to the moving anchor of inflation-rate stability. The remaining sections of the paper review some of the considerations that are relevant to setting the average inflation rate in countries without a fixed nominal anchor.

Subject: Conventional peg, Exchange rate arrangements, Exchange rates, Foreign exchange, Inflation, Monetary policy, Nominal anchors, Prices

Keywords: Conventional peg, Economic system, Exchange rate arrangements, Exchange rates, Inflation, Inflation rate, Inflation standard, Monetary policy, Nominal anchors, Paper money, Price level, Price-level result, Rate of inflation, United States price level, WP

Publication Details

  • Pages:

    41

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1994/061

  • Stock No:

    WPIEA0611994

  • ISBN:

    9781451848106

  • ISSN:

    1018-5941

Notes

Reviews long price-level histories for the United Kingdom and United States.

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