(Post) Keynesian alternative to inflation targeting

Angel Asensio ()
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Angel Asensio: CEPN - Centre d'Economie de l'Université Paris Nord (ancienne affiliation) - UP13 - Université Paris 13 - CNRS - Centre National de la Recherche Scientifique

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Abstract: While the mainstream policies can not be surpassed in the enchanted ‘optimizable'world, (Post) Keynesians have to resign themselves to manage without magic wand inthe uncertain real world. The paper discusses the monetary rules proposed in the recentPost Keynesian literature. It argues that the long-term interest rate is too imperfectlycontrolled for such rules being feasible. Consequently, the quest for credibility isirrelevant, for it makes not much sense to wonder whether authorities will honour theircommitment on an unfeasible ideal target. The right question is whether authoritiespursue convincing objectives so as to move the conventional expectation of the future(and the related interest rate) towards full employment. It is a matter of confidence.The basic principles involved in such an approach to economic policy are discussed.

Keywords: Interest rate rule; Inflation targeting; PostKeynesian; Monetary policy (search for similar items in EconPapers)
Date: 2008-04-04
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00335560
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Published in Inflation targeting, is there a crediblealternative? Organized by the PostKeynesian Study Group, Balliol College., Apr 2008, Oxford, United Kingdom

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