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Unpublished Paper
CAN THE FEDERAL RESERVE ADOPT AN INFLATION TARGETING REGIME UNDER THE CURRENT STATUTORY ARRANGEMENTS?
ExpressO (2010)
  • Hong Kyoon Cho
Abstract
This paper discussed legal perspectives in institutional framework of central banking, keyed to monetary policy framework. The statutory objectives of monetary policy provide an environment under which the central bank can design its monetary policy framework, in that the choice of the monetary policy framework could lie within the scope of the spirits embodied in the statutory objectives of monetary policy. Monetary policy framework could illuminate legal aspects of debate, as specifically seen in the Federal Reserve’s case that has adopted not an explicit but an implicit monetary policy framework, namely the Just-Do-It approach. Under the current legal mandate, i.e., dual mandate, the Federal Reserve might not bind itself only to the price stability because it should also take into account another objective of maximum employment. Inside and outside the Federal Reserve, there have been debates with respect to the Federal Reserve’s unique monetary policy framework. The focus of the arguments hovers over whether the Federal Reserve may have to choose an inflation targeting regime. With respect to the policy regime change of the Federal Reserve, it needs to be born in mind that, even though a clear-cut legal conclusion or solution may not be promptly visible, this is no reason to relax efforts to reach toward the building of a future oriented social consensus. To touch this issue in view of legitimacy, a judgment on the basis of legal and economic considerations should be essential as illustrated in this paper.
Disciplines
Publication Date
October 29, 2010
Citation Information
Hong Kyoon Cho. "CAN THE FEDERAL RESERVE ADOPT AN INFLATION TARGETING REGIME UNDER THE CURRENT STATUTORY ARRANGEMENTS?" ExpressO (2010)
Available at: http://works.bepress.com/hongkyoon_cho/1/