Can, or Should, a Central Bank Inflation Target?

Today’s conventional wisdom states that central banks will be very successful if they engage in developing a monetary policy that targets a specific rate of inflation. To understand whether a central bank can successfully pursue an inflation target policy we must inquire (1) what is the theory that informs us whether a central bank can target inflation? and (2) what is the mechanism that converts a specific monetary policy into achieving a specific rate of inflation? These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.