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Indirect convertibility as a money rule for inflation targeting

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  • J. S. Ferris
  • J. A. Galbraith

Abstract

In this paper we re-examine the case for Indirect Convertibility made by Greenfield and Yeager (1983, 1989) as a mechanism for promoting greater internal price level stability. We argue that with some reinterpretation, indirect convertibility can be interpreted as a convenient, practical monetary policy rule by which central banks engaged in inflation targeting can better achieve their price stabilization goals. It also implies that the more general acceptance of indirect convertibility by a set of countries pursuing a common inflation target would better coordinate group success and by doing so could form an important intermediate step in coordinating the adoption of a common currency

Suggested Citation

  • J. S. Ferris & J. A. Galbraith, 2003. "Indirect convertibility as a money rule for inflation targeting," Applied Financial Economics, Taylor & Francis Journals, vol. 13(10), pages 753-761.
    • Handle: RePEc:taf:apfiec:v:13:y:2003:i:10:p:753-761
    DOI: 10.1080/09603100210148221
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    References listed on IDEAS

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    Cited by:

    1. J. Stephen Ferris, 2003. "Competitive Bank Monies: Reconsidering Hayek and Klein from a Transactions Perspective," Carleton Economic Papers 03-02, Carleton University, Department of Economics.
    2. Keshab Bhattarai, 2008. "An empirical study of interest rate determination rules," Applied Financial Economics, Taylor & Francis Journals, vol. 18(4), pages 327-343.
    3. J. Stephen Ferris & John Galbraith, 2006. "On Hayek's denationalization of money, free banking and inflation targeting," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 13(2), pages 213-231.

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