ABSTRACT
In this chapter, we expose the main contention of the NMC, namely that monetary policy is totally effective as a means of inflation control. Therefore, it is the inflation rate, and not anything else, that must be strictly targeted. In a widely acclaimed article published in the Journal of Economic Perspectives, Bernanke and Mishkin (1997) had presented the salient features of inflation targeting regimes. Under the NMC, inflation targeting is the central policy implication of the price stability mandate of central banks. The NMC and inflation targeting policies have thus become synonymous in the literature. We investigate whether this identity is justified in the light of a wide range of central bank practices between 1989 and 2007.
