TY  - JOUR
AU  - Bernanke,Ben S.
AU  - Mihov,Ilian
TI  - What Does the Bundesbank Target?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5764
PY  - 1996
Y2  - September 1996
UR  - http://www.nber.org/papers/w5764
L1  - http://www.nber.org/papers/w5764.pdf
N1  - Author contact info:
Ben S. Bernanke
E-Mail: Rita.C.Proctor@frb.gov

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