PRICE STABILITY - THE ULTIMATE OBJECTIVE OF MONETARY POLICY Cover Image

STABILITATEA PREŢURILOR – OBIECTIVUL FINAL AL POLITICII MONETARE
PRICE STABILITY - THE ULTIMATE OBJECTIVE OF MONETARY POLICY

Author(s): Florin Dumiter
Subject(s): Economy
Published by: Editura Universităţii Vasile Goldiş
Keywords: price stability; financial stability; time inconsistency problem; fiscal policy; monetary policy; economic outcome

Summary/Abstract: Nowadays, it is obvious that both stable money and price stability could be an important objective for the development of the society. The main aspect in this sense is conferred by the institutional mechanism which guarantees the price stability. The concept of price stability means the situation in which the expected changes over the medium price level are gradual and not taken into consideration by the houses and economic institutions decisions. Referring to this aspect, for granting price stability, the central bank must have the ability to issue money and to control the monetary base. An important argument is the credibility to constrain the discretionary power of money issue through institutional mechanisms. Independent central banks with clear mandates focused on price stability may be the best solution in this sense.

  • Issue Year: 21/2011
  • Issue No: 1
  • Page Range: 561-572
  • Page Count: 12
  • Language: Romanian