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The Whys and Wherefores of Controlling Inflation

Author

Listed:
  • Peter Sinclair

    (University of Birmingham, U.K.)

Abstract

The paper develops a case that if inflation targeting is to be adopted then monetary authority should move away from one year to longer target period for inflation. Three years is the interval of time over which the inflation effects of monetary policy decisions are almost complete. It is suggested that an annual inflation target of 4 % with the proviso that this should be achieved over successive three years period could be set by allowing a deviation of 2% around the target at the end of each three years.

Suggested Citation

  • Peter Sinclair, 2009. "The Whys and Wherefores of Controlling Inflation," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 5, pages 31-52.
    • Handle: RePEc:sbp:journl:35
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    File URL: http://www.sbp.org.pk/research/bulletin/2009/vol5/TheWhysandWhereforesofControlling.pdf
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    Cited by:

    1. Mohsin S. Khan, 2009. "The Design and Conduct of Monetary Policy: Lessons for Pakistan (The Quaid-i-Azam Lecture)," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(4), pages 337-356.
    2. Muhammad, Omer & de Haan, Jakob & Scholtens, Bert, 2014. "Impact of Interbank Liquidity on Monetary Transmission Mechanism: A Case Study of Pakistan," MPRA Paper 56161, University Library of Munich, Germany.

    More about this item

    Keywords

    inflation targeting; core inflation;

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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