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Can, or should, a central bank inflation target?

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  • PAUL DAVIDSON

Abstract

Classical theory monetarists assumed the quantity theory's equation of exchange gave the central bank direct control of inflation via an exogenous money supply. After Milton Friedman's "natural rate of unemployment" thesis, classical theory recognized that inflation targeting could only be achieved by affecting the unemployment rate. Keynes's theory argues that the central bank can target inflation only via installing an "incomes policy of fear."

Suggested Citation

  • Paul Davidson, 2006. "Can, or should, a central bank inflation target?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 28(4), pages 689-703.
    • Handle: RePEc:mes:postke:v:28:y:2006:i:4:p:689-703
    DOI: 10.2753/PKE0160-3477280409
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    Cited by:

    1. Angel Asensio, 2007. "Inflation targeting drawbacks in the absence of a 'natural' anchor," Post-Print halshs-00189225, HAL.
    2. Charan Singh, 2015. "Inflation Targeting in India: Select Issues," Working Papers id:7131, eSocialSciences.
    3. Jesús Ferreiro & Carmen Gómez, 2014. "Implementing a Voluntary Wage Policy: Lessons from the Irish and Spanish Wages Policies before the Crisis," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(1), pages 107-127, Februar.
    4. Eckhard Hein & Engelbert Stockhammer, 2010. "Macroeconomic Policy Mix, Employment and Inflation in a Post-Keynesian Alternative to the New Consensus Model," Review of Political Economy, Taylor & Francis Journals, vol. 22(3), pages 317-354.
    5. Charan Singh, 2015. "Inflation Targeting India: Select Issues," Working Papers id:7002, eSocialSciences.
    6. Eckhard Hein & Christian Schoder, 2011. "Interest rates, distribution and capital accumulation -- A post-Kaleckian perspective on the US and Germany," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(6), pages 693-723, November.
    7. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.
    8. Angel Asensio, 2009. "Between the cup and the lip," Working Papers halshs-00496911, HAL.
    9. Giorgos Argitis, 2011. "A view on post-Keynesian interest rate policy," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 8(1), pages 91-112.
    10. Singleton,John, 2010. "Central Banking in the Twentieth Century," Cambridge Books, Cambridge University Press, number 9780521899093, September.
    11. Angel Asensio, 2012. "Between the Cup and the Lip: On Post Keynesian Interest Rate Rules and Long-term Interest Rate Management," Chapters, in: Louis-Philippe Rochon & Salewa ‘Yinka Olawoye (ed.), Monetary Policy and Central Banking, chapter 1, Edward Elgar Publishing.
    12. 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.
    13. Mevlut Tatliyer, 2017. "Inflation targeting and the need for a new central banking framework," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 40(4), pages 512-539, October.
    14. Angel Asensio, 2009. "Bad money and distributive conflict," Working Papers halshs-00496919, HAL.
    15. Angel Asensio, 2008. "(Post) Keynesian alternative to inflation targeting," Post-Print halshs-00335560, HAL.
    16. Mahmood, Haroon & Rehman, Kashif-ur-, 2013. "An Analysis of Macroeconomic State and Prospects of Pakistan during Recent Global Financial Turmoil," MPRA Paper 49447, University Library of Munich, Germany.

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