Commentary

conflicting evidence. The recent paper by Laurence Ball and Niamh Sheridan, for example, offers a quite different interpretation of the same experience that Levin et al. study: “This paper asks whether inflation targeting improves economic performance, as meas-ured by the behavior of inflation, output, and interest rates...Once one controls for regression to the mean, there is no evidence that inflation targeting improves performance”.3 The main issues in Faust and Henderson’s paper, however, are conceptual. In particular, they continually—and rightly—highlight the role of inflation targeting as a way for the central bank to communicate with the public. They approvingly quote Bernanke, Laubach, Mishkin, and Posen to the effect that among the “important features of infla-tion targeting are vigorous efforts to communicate with the public about the plans and objectives of the monetary authorities... ” (p. 118, emphasis added by Faust and Henderson).4 They begin their own paper by saying, “The core requirements of inflation targeting are an explicit long-run inflation goal and a strong commitment to transparency ” (my empha-sis). And they go on to say, “Not only are ITF [infla-tion targeting framework] central banks among the most transparent in the world, they have experi-mented aggressively with ways to make communi-cation with the public more effective ” (p. 117). I disagree. As typically practiced today, inflation targeting is a framework not for communicating the central bank’s goals and policies but for obscur-ing them. In crucial ways it is not a window but a screen. It promotes not transparency—at least not in the dictionary sense of the word—but opaqueness. The key issue here, as Faust and Henderson clearly understand, is multiple goals. Monetary policy has one instrument: typically today some short-ter