Does institutional change really matter? Inflation targets, central bank reform and interest rate policy in the OECD countries.

Muscatelli, V. A., Tirelli, P. and Trecroci, C. (2002) Does institutional change really matter? Inflation targets, central bank reform and interest rate policy in the OECD countries. Manchester School, 70(4), pp. 487-527. (doi: 10.1111/1467-9957.00298)

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Abstract

We estimate forward-looking interest-rate reaction functions for the G3 economies and for a group of countries which recently adopted inflation targets. Some significant shifts in the conduct of monetary policy are detected in the G3 countries, especially in the USA and Japan. In contrast with popular wisdom, it is only since the 1990s that policies in these countries begin to look consistent with an inflation-targeting regime. In addition, the introduction of inflation targeting and central bank reforms in countries like Sweden, Canada and New Zealand has not led to major changes in the way in which central banks react to the objectives of economic policy. In all cases changes in policy behaviour pre-date the introduction of inflation targets and central bank reforms. The paper challenges the one-size-fits-all attitude towards modern central bank policymaking which permeates a great deal of the current literature.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Trecroci, Mr Carmine and Muscatelli, Professor Anton
Authors: Muscatelli, V. A., Tirelli, P., and Trecroci, C.
College/School:College of Social Sciences > Adam Smith Business School > Economics
College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Manchester School
Publisher:Blackwell Publishers
ISSN:1463-6786
ISSN (Online):1467-9957

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