TY  - JOUR
AU  - Fatas,Antonio
AU  - Mihov,Ilian
AU  - Rose,Andrew K.
TI  - Quantitative Goals for Monetary Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10846
PY  - 2004
Y2  - October 2004
UR  - http://www.nber.org/papers/w10846
L1  - http://www.nber.org/papers/w10846.pdf
N1  - Author contact info:
Antonio Fatás
INSEAD
Boulevard de Constance
77300 Fontainebleau
France
E-Mail: antonio.fatas@insead.edu

Ilian Mihov
INSEAD
1 Ayer Rajah Avenue
Singapore 138676
Singapore
E-Mail: ilian.mihov@insead.edu

Andrew K. Rose
Haas School of Business Administration
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-6609
Fax: 510/642-4700
E-Mail: arose@haas.berkeley.edu
AB  - We study empirically the macroeconomic effects of an explicit de jure quantitative goal for monetary policy. Quantitative goals take three forms: exchange rates, money growth rates, and inflation targets. We analyze the effects on inflation of both having a quantitative target, and of hitting a declared target; we also consider effects on output volatility. Our empirical work uses an annual data set covering 42 countries between 1960 and 2000, and takes account of other determinants of inflation (such as fiscal policy, the business cycle, and openness to international trade), and the endogeneity of the monetary policy regime. We find that both having and hitting quantitative targets for monetary policy is systematically and robustly associated with lower inflation. The exact form of the monetary target matters somewhat, but is less important than having some quantitative target. Successfully achieving a quantitative monetary goal is also associated with less volatile output.
ER  -