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Multiple Objectives in Monetary Policy: A De Facto Analysis for ‘Advanced’ Countries

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  • David Cobham

Abstract

type="main"> A statistical methodology is developed to identify when policymakers in ‘advanced’ economies have successfully pursued different single objectives or multiple objectives. Multiple objectives pure and simple are distinguished from multiple objectives subject to a price stability constraint. The overall and individual country results seem plausible. Unconditional and conditional analyses reveal that constrained multiple objectives are associated with roughly as good economic performance (inflation, economic growth) as the single objective of inflation. Finally the paper shows how the remit of an inflation-targeting central bank could be adjusted to allow it to pursue other objectives in extremis without losing the credibility effects associated with inflation targeting.

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  • David Cobham, 2015. "Multiple Objectives in Monetary Policy: A De Facto Analysis for ‘Advanced’ Countries," Manchester School, University of Manchester, vol. 83, pages 83-106, September.
    • Handle: RePEc:bla:manchs:v:83:y:2015:i::p:83-106
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    File URL: http://hdl.handle.net/10.1111/manc.12102
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    References listed on IDEAS

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    1. David Cobham, 2013. "Central banks and house prices in the run-up to the crisis," Oxford Economic Papers, Oxford University Press, vol. 65(suppl_1), pages 42-65, April.
    2. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(2), pages 379-408.
    3. Husain, Aasim M. & Mody, Ashoka & Rogoff, Kenneth S., 2005. "Exchange rate regime durability and performance in developing versus advanced economies," Journal of Monetary Economics, Elsevier, vol. 52(1), pages 35-64, January.
    4. Gill Hammond, 2012. "State of the art of inflation targeting," Handbooks, Centre for Central Banking Studies, Bank of England, edition 4, number 29, April.
    5. Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 1-48.
    6. Bernanke, Ben S. & Mihov, Ilian, 1997. "What does the Bundesbank target?," European Economic Review, Elsevier, vol. 41(6), pages 1025-1053, June.
    7. David Cobham, 2012. "The past, present, and future of central banking," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 28(4), pages 729-749, WINTER.
    8. David Cobham & Stefania Cosci & Fabrizio Mattesini, 2008. "Informal Central Bank Independence: An Analysis For Three European Countries," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(3), pages 251-280, July.
    9. Stephen G. Cecchetti & Hans Genberg & Sushil Wadhwani, 2002. "Asset Prices in a Flexible Inflation Targeting Framework," NBER Working Papers 8970, National Bureau of Economic Research, Inc.
    10. Levy-Yeyati, Eduardo & Sturzenegger, Federico, 2005. "Classifying exchange rate regimes: Deeds vs. words," European Economic Review, Elsevier, vol. 49(6), pages 1603-1635, August.
    11. repec:ags:aaea07:383 is not listed on IDEAS
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    1. Cobham, David, 2018. "A comprehensive classification of monetary policy frameworks for advanced and emerging economies," MPRA Paper 84737, University Library of Munich, Germany.

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