Monetary Policy Frameworks in a Global Context

Lavan Mahadeva is adviser for Modelling and Forecasting at the Bank of England and Gabriel Sterne is an adviser for Monetary Analysis at the Bank of England. Their work at the Bank of England’s Centre for Central Banking Studies is to provide technical assistance and establish collaborative research with economists from a very broad range of economies, and together they have worked in around 20 countries in recent years.

• General introduction PART I Key issues in the choice of monetary policy framework 1 Introduction 2 A historical examination of inflation stability under alternative monetary frameworks 3 The use of explicit targets for monetary policy: practical experiences in 93 economies in the 1990s 4 The devil in the detail of monetary policy frameworks: issues and measures of monetary framework characteristics 5 The devil in the detail of monetary policy frameworks (2): interpreting measures of framework characteristics 6 What does independence mean to central banks? 7 Redesigning the monetary policy framework: practical Considerations; 8 Conclusions and summary PART II Monetary policy strategies; Monetary policy objectives in emerging markets in light of the Asian crisis; The role of the Monetary Policy Committee: strategic considerations; Establishing a reputation for dependability by means of inflation; Targets; PART III Transmission mechanisms and monetary frameworks; Modelling the transmission mechanism of monetary policy in the Czech Republic; Setting monetary policy instruments in Uganda; Monetary policy in a dollarised economy: the case of Peru; The Balassa-Samuelson effect and monetary targets PART IV Country experiences with different monetary strategies; Lessons from the Bundesbank on the occasion of its early retirement; What can inflation expectations and core inflation tell us about monetary policy in Japan? Inflation and money goals: the recent experience of monetary policy in Mexico; Inflation targets and stabilisation in Chile; Monetary policy and disinflation in Israel; Inflation targeting in the Czech Republic PART V Specifying and using targets; Core inflation as an indicator in monetary policy rules Specifying an inflation target: the case of administered prices and other candidates for exclusion Exchange rate considerations in a small open economy: a critical look at the MCI as a possible solution