Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/57360
Authors: 
Issing, Otmar
Year of Publication: 
2011
Series/Report no.: 
CFS Working Paper 2011/13
Abstract: 
This paper outlines important lessons for monetary policy. In particular, the role of inflation targeting, which was much acclaimed prior to the financial crisis and since then has not lost much of its endorsement, is critically reviewed. Ignoring the relation between monetary policy and asset prices, as is the case in this monetary policy approach, can lead to financial instability. In contrast, giving, inter alia, monetary factors a role in central banks' policy decisions, as is done in the ECB's encompassing approach, helps prevent these potentially harmful side effects and thus allows for fostering financial stability. Finally, this paper makes a case against increasing the central banks' inflation target.
Subjects: 
Inflation Targeting
Asset Prices
Financial Stability
ECB
JEL: 
E44
E52
E58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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