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The more things change . . . inflation targeting and central bank policy

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  • LOUIS-PHILIPPE ROCHON

Abstract

Over the past several decades, monetary theory and policy have been rather consistent, giving credence to the old adage that "the more things change, the more they stay the same." Indeed, three constants in monetary policy can be identified: (1) central banks always strive for some form of price stability, (2) inflation is always and everywhere a demand phenomenon, and (3) monetary policy is always neutral in the long run. Even the latest version of mainstream theory, under the guises of the "new consensus," is strangely consistent with this approach, despite advocating exogenous rates of interest and endogenous money. Inflation targeting is a restatement of the old doctrine, with all the traditional bells and whistles.

Suggested Citation

  • Louis-Philippe Rochon, 2006. "The more things change . . . inflation targeting and central bank policy," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 28(4), pages 551-558.
    • Handle: RePEc:mes:postke:v:28:y:2006:i:4:p:551-558
    DOI: 10.2753/PKE0160-3477280401
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    Cited by:

    1. Angel Asensio, 2011. "Inflation Targeting Drawbacks in the Absence of a ‘Natural’ Anchor: A Keynesian Appraisal of the Fed and ECB Policies from 1999 to 2006," Chapters, in: Claude Gnos & Louis-Philippe Rochon (ed.), Credit, Money and Macroeconomic Policy, chapter 11, Edward Elgar Publishing.
    2. Angel Asensio, 2007. "Inflation targeting drawbacks in the absence of a 'natural' anchor," Post-Print halshs-00189225, HAL.
    3. Jan Korda, 2010. "Komparace nového konsensu jako teoretického rámce cílování inflace s postkeynesovskou ekonomií [A Comparison of New Consensus as a Theoretical Framework of Inflation Targeting with Post-Keynesian E," Politická ekonomie, Prague University of Economics and Business, vol. 2010(1), pages 92-104.

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