Description
Truman (a former assistant secretary of the Treasury for international affairs during the Clinton presidency) promotes inflation targeting as a sound framework for conducting monetary policy through central banks. Inflation targeting, in his formulation, consists of an emphasis on price stability, numerical targeting of prices, time horizons for reaching targets, and ongoing review of targeting. He optimistically discusses the implications of wide-scale adoption of inflation targeting and the structure and functioning of the international financial system. Annotation (c) Book News, Inc., Portland, OR (booknews.com)
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This study reviews the literature on the contribution of low inflation to economic growth and the subsequent widespread adoption of inflation targeting as a monetary policy framework. Edwin Truman addresses the challenges and risks associated with such a framework. Building on these foundations, the study focuses on two major international economic policy issues: (1) the implications of differing national regimes of inflation targeting for international economic policy cooperation; and (2) the adoption of inflation targeting by emerging-market economies which often lack stable monetary policy environments and credible policy authorities—a situation which, among other things, can complicate the use of the inflation targeting framework as the basis for IMF-supported stabilization programs.
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