Template-Type:ReDIF-Paper 1.0  
Title:The Strategy of Monetary Targeting: Can the German Experience Provide a Model for the ECB?
Author-Name: Neumann, M. J. M. 
Author-Name: Hagen, Jürgen von
Classification-JEL:E52, E58
Keywords:
Abstract:This paper studies the Deutsche Bundesbank's concept of monetary targeting and discusses its merits relative
	to the Anglo-Saxon concept of direct inflation targeting. It is shown that monetary targeting is an effective device for
	anchoring medium-term inflation expectations. At the same time, this intermediate approach permits sufficient
	flexibility for leaning against the wind of currency appreciation and for responding to short-term events. Since there is
	no evidence that suggests that money demand will be unstable at European Level, it is argued that monetary targeting
	makes a suitable concept for the future ECB. Direct inflation targeting, in contrast, is likely to either prevent the ECB
	from gaining credibility or to require responding to price level shocks in an overly contractionary fashion.
Length: pages
Creation-Date: 1995-07
Revision-Date: 
Handle: RePEc:bon:bonsfb:324