492 - Strategies for monetary policy: the differences between money and direct inflation targeting in theory and practice

Wetenschappelijke publicatie
Date 6 February 1997

This paper provides an overview of the literature about the differences between money and direct inflation targeting. The experiences of the implemented monetary policy strategies in Germany, Canada, New Zealand and the United Kingdom are described. Finally, the paper empirically analyses the monetary policy strategy in Germany and the United Kingdom with the use of interest rate reaction functions. The empirical results suggest that, despite differences in monetary policy strategy, the use of the interest rate instrument is governed especially by the inflationary development.