Financial crisis and monetary policy targets

Abstract

The prolonged financial market and sovereign debt crisis has stimulated increased research into economic policy measures and their effectiveness. In monetary policy, the zero lower bound has brought about new non-standard measures as well as forward-looking communication on future accommodation. The aim of such forward guidance is to generate expectations that policy is going to remain accommodative for some time. With the financial crisis, there is also fresh interest in price level and nominal income targeting as alternatives to inflation targeting.