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Norway’s Road to Inflation Targeting: Overcoming the Fear of Floating

Author

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  • Øyvind Eitrheim

    (Norges Bank)

  • Jan Fredrik Qvigstad

    (Norges Bank)

Abstract

We review developments in monetary policy and exchange rate regimes in Norway since the Bretton Woods system collapsed. Norway has traditionally had a monetary policy regime geared towards exchange rate stability. The long history with fixed exchange rates as "normalcy" may be one factor which explains the rather late transition to inflation targeting in Norway. This "fear of floating" may seem hard to explain today. We look at five episodes, in 1992, 1998, 2008, 2014 and 2020, respectively, through the lens of the prevailing monetary regime in real-time. What if we had reacted "as if" under the opposite regime?

Suggested Citation

  • Øyvind Eitrheim & Jan Fredrik Qvigstad, 2024. "Norway’s Road to Inflation Targeting: Overcoming the Fear of Floating," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 66(3), pages 482-534, September.
    • Handle: RePEc:pal:compes:v:66:y:2024:i:3:d:10.1057_s41294-024-00241-1
    DOI: 10.1057/s41294-024-00241-1
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    References listed on IDEAS

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    Cited by:

    1. Alexander Rathke & Tobias Straumann & Jan-Egbert Sturm, 2024. "Editorial for the Special Issue of Comparative Economic Studies: 50 Years After the End of Bretton Woods—The Experiences of Small Open Economies," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 66(3), pages 389-393, September.

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    More about this item

    Keywords

    Monetary policy; Exchange rate regime; Central banks;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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