NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

What Does the Bundesbank Target?

Ben S. Bernanke, Ilian Mihov

NBER Working Paper No. 5764
Issued in September 1996
NBER Program(s):   EFG   ME

Although its primary ultimate objective is price stability, the Bundesbank has drawn a distinction between its money-focus strategy and the inflation targeting approach recently adopted by a number of central banks. We show that, holding constant the current forecast of inflation, German monetary policy responds very little to changes in forecasted money growth; we conclude that the Bundesbank is much better described as an inflation targeter than as a money targeter. An additional contribution of the paper is to apply the structural VAR methods of Bernanke and Mihov (1995) to determine the optimal indicator of German monetary policy: We find that the Lombard rate has historically been a good policy indicator, although the use of the call rate as an indicator cannot be statistically rejected.

download in pdf format
   (1835 K)

email paper

This paper is available as PDF (1835 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w5764

Published: Bernanke, Ben S. and Ilian Mihov. "What Does The Bundesbank Target?," European Economic Review, 1997, v41(6,Jun), 1025-1053.

Users who downloaded this paper also downloaded these:
Clarida and Gertler How the Bundesbank Conducts Monetary Policy
Bernanke and Mihov w5145 Measuring Monetary Policy
Bernanke and Mishkin w5893 Inflation Targeting: A New Framework for Monetary Policy?
Clarida and Gertler w5581 How the Bundesbank Conducts Monetary Policy
Clarida, Gali, and Gertler w6254 Monetary Policy Rules in Practice: Some International Evidence
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us