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Inflation Targeting in Western Europe

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  • Antonio Moreno Ibáñez

    (School of Economics and Business Administration, University of Navarra)

  • Luis Rey

    (European University Institute)

Abstract

Several European countries adopted inflation targeting as a monetary policy strategy during the 1990s. This article evaluates the impact of the establishment of this policy framework on the dynamics of inflation for three countries: United Kingdom, Spain and Finland. While smaller shocks triggered most of the decline in their high frequency inflation volatility, this is not always the case for their low frequency (trend) counterpart. We find that, in the case of the United Kingdom, the more aggressive monetary policy stance against inflation during the inflation targeting period was the most important factor behind the decline in trend inflation volatility.

Suggested Citation

  • Antonio Moreno Ibáñez & Luis Rey, 2005. "Inflation Targeting in Western Europe," Faculty Working Papers 14/05, School of Economics and Business Administration, University of Navarra.
    • Handle: RePEc:una:unccee:wp1405
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    References listed on IDEAS

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    Cited by:

    1. Hadj Fraj, Salma & bouchoucha, Najeh & Maktouf, Samir, 2020. "Political stability and economic growth: the role of exchange rate regime," MPRA Paper 104586, University Library of Munich, Germany.
    2. Hadj Fraj, Salma & Hamdaoui, Mekki & Maktouf, Samir, 2018. "Governance and economic growth: The role of the exchange rate regime," International Economics, Elsevier, vol. 156(C), pages 326-364.

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    More about this item

    Keywords

    Inflation Targeting; Europe; Central Bank Policy; Structural Analysis;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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