National Bureau of Economic Research Studies in Business Cycles – serie

Over the past fifteen years, a significant number of industrialized and middle-income countries have adopted inflation targeting as a framework for monetary policymaking. As the name suggests, in such inflation-targeting regimes, the central bank is responsible for achieving a publicly announced target for the inflation rate. While the objective of controlling inflation enjoys wide support among both academic experts and policymakers, and while the countries that have followed this model have generally experienced good macroeconomic outcomes, many important questions about inflation targeting remain.In Inflation Targeting, a distinguished group of contributors explores the many underexamined dimensions of inflation targeting—its potential, its successes, and its limitations—from both a theoretical and an empirical standpoint, and for both developed and emerging economies. The volume opens with a discussion of the optimal formulation of inflation-targeting policy and continues with a debate about the desirability of such a model for the United States. The concluding chapters discuss the special problems of inflation targeting in emerging markets, including the Czech Republic, Poland, and Hungary.

In this text leading monetary economists discuss applied aspects of monetary policy and offer practical research on the timing, magnitude, and channels of central banking actions. The contributors evaluate a variety of policy rules based on monetary aggregates, nominal income, commodity prices, and other economic variables. They also analyze price behaviour and inflation, particularly the short-run behaviour of prices. Other papers examine the monetary transmission mechanism - the channel through which the central bank's actions affect spending on goods and services - with a special focus on the reduction in bank lending that must accompany a reduction in reserves. The book is intended for monetary specialists, graduate students and economists.

The inability of forecasters to accurately predict the recent recession emphasizes the need for better ways for charting the course of the economy. In this volume, economists examine forecasting techniques developed over the past ten years, compare their performance to traditional econometric models, and discuss new methods for forecasting and time series analysis. The volume begins with an examination of the historical performance of economic forecasts, using data collected from a quarterly survey of macroeconomic forecasters from 1968 through 1990. Strengths and weaknesses of these predictions are discussed and new insights into the potential and limitations of forecasting are provided. The following three chapters use recently developed statistical techniques for predicting recessions and expansions, and examine the performance of these techniques during the 1990-91 recession. Chapter five explores why the spread between public and private interest rates has been a good predictor of real economic activity. Chapter six examines the relation between the duration of a business cycle and the likelihood of its end.The final two chapters discuss methods for economic time series and forecasting.

This volume presents late-1990s thinking on monetary policy rules and seeks to determine just what types of rules and policy guidelines function best. A co-operative research effort that allowed contributors to evaluate different policy rules using their own specific approaches, this collection presents their findings on the potential response of interest rates to an array of variables, including alterations in the rates of inflation, unemployment, and exchange. This work illustrates that simple policy rules are more robust and more efficient than complex rules with multiple variables. A state-of-the-art appraisal of the fundamental issues facing the Federal Reserve Board and other central banks, the text should be of interest for economic analysts and policymakers alike.

This volume presents the most complete collection available of the work of Victor Zarnowitz, a leader in the study of business cycles, growth, inflation, and forecasting.. With characteristic insight, Zarnowitz examines theories of the business cycle, including Keynesian and monetary theories and more recent rational expectation and real business cycle theories. He also measures trends and cycles in economic activity; evaluates the performance of leading indicators and their composite measures; surveys forecasting tools and performance of business and academic economists; discusses historical changes in the nature and sources of business cycles; and analyzes how successfully forecasting firms and economists predict such key economic variables as interest rates and inflation.