Prospects for an inflation-targeting Fed

Beginning with the Reserve Bank of New Zealand Act of 1989, more than twenty central banks have adopted or been assigned inflation targets, and the number is increasing. Economists and journalists ask whether the Federal Reserve should subscribe to what is almost a consensus on the appropriate conduct of monetary policy. Unfortunately or not, because of the unique American political system, it cannot. This is not a cause for concern, however, because experiences across time and countries show