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KFG working paper      
The Consolidation of the Anglo-Saxon/European Consensus on Price Stability
Krampf, Arie ;  Kolleg-Forschergruppe The Transformative Power of Europe <Berlin>

Main titleThe Consolidation of the Anglo-Saxon/European Consensus on Price Stability
SubtitleFrom International Coordination to a Rule-Based Monetary Regime
AuthorKrampf, Arie
InstitutionKolleg-Forschergruppe The Transformative Power of Europe <Berlin>
No. of Pages35 S.
Series
KFG working paper      
KFG working paper
Report no.47
Classification (DDC)332 Financial economics
Also published in
AbstractDuring the 1990s, a consensus consolidated among policy makers and economists worldwide regarding the desirability of very low inflation targeting. So far, this process has been explained on the basis of a domestic-functional thesis, according to which commitment to very low inflation provides local economic gains with no costs. In this paper, I present an alternative explanation, according to which the global norm of very low inflation targeting was consolidated as a political solution to the problem of exchange rate misalignment and volatility. I argue that policy makers in Germany and the US believed that convergence of monetary policies and inflation rates, in addition to liberalization of financial markets, will stabilize exchange rates without the need for direct coordination. The paper employs the theory of liberal intergovernmentalism as a benchmark to explain the choice of the European and the G-5/7 countries to establish a low-inflation rule-based international monetary regime. The paper concludes that the regime of very low inflation targeting was consolidated as a politically viable solution to a political problem rather than as an economic best practice. Furthermore, it concludes that the norm of very low inflation targeting was a “corer solution” that neglected the problem of exchange rate stability.
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FU DepartmentDepartment of Political and Social Sciences
Other affiliation(s)Kolleg-Forschergruppe "The Transformative Power of Europe"
Year of publication2012
Type of documentBook
LanguageEnglish
Terms of use/Rights Nutzungsbedingungen
Created at2012-12-02 : 08:03:47
Last changed2014-01-23 : 04:23:00
 
Static URLhttp://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000015390
ISSN1868-7601
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