An institutional assessment of inflation targeting as a framework for monetary policy

[摘要] ENGLISH ABSTRACT:A number of themes run through this dissertation, the first of which is the importance of moneyin facilitating decentralised decision making by lowering transaction costs and by contributing tothe definition and maintenance of property rights. A second (and more melancholy) theme is thatgovernment control of money has often been poor, and systematically so since the War. Thisleads to a third theme, the combined force of economic theory and central bank practice of thelast quarter of a century or so has led to clearer limits to the discretionary power of governmentin the management of money. These limits are increasingly expressed as contingent rulescontaining explicit targets for monetary policy, for example an inflation target.The objective of this thesis is to evaluate inflation targeting both normatively and positively as aframework for monetary policy. A set of criteria from the New Institutional Economics literatureis used to evaluate the extent to which inflation targeting captures the lessons from the threethemes mentioned above, in both normative and positive dimensions. The practical importanceof the thesis is in the application of this institutional evaluation to the inflation the targetingregime of recent vintage in South Africa, which leads to a number of policy recommendations.Part I consists of three chapters of which the first two are mainly abstract and concerned withthe theory of the New Institutional Economics. The third chapter has a historical character andconsiders the history of and recent trends in monetary policy. These trends are consistent withadopting an inflation target as a framework for monetary policy.The second part of the thesis starts with a theoretical consideration of monetary policy rules inchapter 4, and is followed by a discussion of one such rule, inflation targeting, in chapter 5. Thisdiscussion starts with the theory of inflation targeting, but proceeds to details of actual inflationtargeting central banks, with special reference the South African Reserve Bank (SARB). Thehistory of anti-cyclical monetary in South Africa is also considered empirically to determinewhether inflation targeting would represent an important new direction on this issue.Chapter 6 follows with a literature review of the empirical record of the first decade of inflationtargeting internationally. The seventh chapter is the core of the thesis and provides theinstitutional evaluation of inflation targeting. This evaluation is applied to the present inflationtargeting regime in South Africa, and leads to recommended policy reforms. These policyreforms are mapped on a two-dimensional chart that indicates their priority and the expectedcost of the associated institutional reform. Additionally a new econometric methodology is usedin chapter 7 to gauge the contribution of monetary policy to the more stable economy of recentyears.In part 3 the focus of the thesis turns to certain political economy considerations that arise fromthe independence of the central banks (as is typical for inflation targeting central banks). Chapter8 considers the issue of central bank independence and is followed by an application ofconstitutional economics to inflation targeting in chapter 9. Whereas the bulk of the dissertationis concerned with the positive evaluation of inflation targeting, chapter 9 attempts a normativeevaluation using the Pareto-Wicksell criterion. Both the positive and normative assessments inthis thesis support the case for inflation targeting as a framework for monetary policy,

[发布机构] Stellenbosch University