National or international inflation targeting? : The Wicksellian dilemma of the Euro-outs
(2002) In Journal of Public Policy 22(2). p.183-197- Abstract
- Inflation targeting is the monetary strategy of all EU member states; whether in the euro area, the two euro-outs, Sweden and the United Kingdom. The latter are now faced with two alternatives to achieve price stability: either remain outside the euro area or join it as full-fledged members. This paper examines this policy choice starting from the views of Knut Wicksell, who considered it in his 1920s analysis of an international monetary system based on price level targeting. Price stability could be achieved either within every country by maintaining flexible exchange rates or jointly on a global scale through a system of fixed exchange rates, that is through a monetary union. To him this was a choice between two ‘evils’: fluctuating... (More)
- Inflation targeting is the monetary strategy of all EU member states; whether in the euro area, the two euro-outs, Sweden and the United Kingdom. The latter are now faced with two alternatives to achieve price stability: either remain outside the euro area or join it as full-fledged members. This paper examines this policy choice starting from the views of Knut Wicksell, who considered it in his 1920s analysis of an international monetary system based on price level targeting. Price stability could be achieved either within every country by maintaining flexible exchange rates or jointly on a global scale through a system of fixed exchange rates, that is through a monetary union. To him this was a choice between two ‘evils’: fluctuating price levels in the member states of a global monetary union while the average price level is maintained constant versus fluctuating exchange rates in the absence of a monetary union. To Wicksell, the choice of the proper route towards price stability was less complicated than today because he analysed it solely in monetary terms. The current choice for Sweden and the United Kingdom involves other crucial dimensions, such as the existence of nominal rigidities, and the politics of domestically issued money. Political aspects concerning the euro will be the ultimate determinants of the future monetary path for both countries. (Less)
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https://lup.lub.lu.se/record/6bb5f595-9aeb-4a0c-a3f5-2fc0f3ce10c3
- author
- Jonung, Lars LU
- publishing date
- 2002-09
- type
- Contribution to journal
- publication status
- published
- subject
- in
- Journal of Public Policy
- volume
- 22
- issue
- 2
- pages
- 15 pages
- publisher
- Cambridge University Press
- external identifiers
-
- scopus:0036589110
- ISSN
- 0143-814X
- DOI
- 10.1017/S0143814X02005068
- language
- English
- LU publication?
- no
- additional info
- Cited By :2 Export Date: 22 February 2017
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- 6bb5f595-9aeb-4a0c-a3f5-2fc0f3ce10c3
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- https://www.scopus.com/inward/record.uri?eid=2-s2.0-0036589110&doi=10.1017%2fS0143814X02005068&partnerID=40&md5=bd656614f8d06f1e105a8affbc014a3f
- date added to LUP
- 2017-02-23 10:31:00
- date last changed
- 2022-01-30 18:20:33
@article{6bb5f595-9aeb-4a0c-a3f5-2fc0f3ce10c3,
abstract = {{Inflation targeting is the monetary strategy of all EU member states; whether in the euro area, the two euro-outs, Sweden and the United Kingdom. The latter are now faced with two alternatives to achieve price stability: either remain outside the euro area or join it as full-fledged members. This paper examines this policy choice starting from the views of Knut Wicksell, who considered it in his 1920s analysis of an international monetary system based on price level targeting. Price stability could be achieved either within every country by maintaining flexible exchange rates or jointly on a global scale through a system of fixed exchange rates, that is through a monetary union. To him this was a choice between two ‘evils’: fluctuating price levels in the member states of a global monetary union while the average price level is maintained constant versus fluctuating exchange rates in the absence of a monetary union. To Wicksell, the choice of the proper route towards price stability was less complicated than today because he analysed it solely in monetary terms. The current choice for Sweden and the United Kingdom involves other crucial dimensions, such as the existence of nominal rigidities, and the politics of domestically issued money. Political aspects concerning the euro will be the ultimate determinants of the future monetary path for both countries.}},
author = {{Jonung, Lars}},
issn = {{0143-814X}},
language = {{eng}},
number = {{2}},
pages = {{183--197}},
publisher = {{Cambridge University Press}},
series = {{Journal of Public Policy}},
title = {{National or international inflation targeting? : The Wicksellian dilemma of the Euro-outs}},
url = {{http://dx.doi.org/10.1017/S0143814X02005068}},
doi = {{10.1017/S0143814X02005068}},
volume = {{22}},
year = {{2002}},
}