Inflation targeting and central bank independence: we are all Keynesians now! or are we?

Abstract

A number of countries have adopted inflation targeting since the early 1990s in an attempt to reduce inflation to low levels. A number of its ingredients can be found in Keynes, especially that of central bank independence. Is it then the case that we are all Keynesians now? The main theoretical ingredients of inflation targeting appear to be very different from Keynes's ideas on central banking and its policy objectives. Regrettably, we may not all be Keynesians after all, or not yet!

Keywords:

• central bank independence
• inflation targeting
• Keynesian economics
• monetary policy
• new consensus macroeconomics