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This book by a leading authority on monetary policy offers a unique view of the subject from the perspectives of both scholar and practitioner. The book discusses the changes in the conduct of monetary policy in recent years, in particular the turn to inflation targeting. It sums up "Everything You Wanted to Know about Monetary Policy Strategy, But Were Afraid to Ask," and reflects on what we have learnt about monetary policy over the last thirty years.
The book blends theory, empirical evidence, and extensive case studies of monetary policy in advanced and emerging market and transition economies. Throughout, its focus is on the following key areas :
the importance of price stability and a nominal anchor
fiscal and financial preconditions for achieving price stability
central bank independence as an additional precondition
central bank accountability
the rationale for inflation targeting
the optimal inflation target
central bank transparency and communication
the role of asset prices in monetary policy.