mey310.tex Comments on Laurence H. Meyer, “Practical Problems and Obstacles to Inflation Targeting” by

Larry Meyer has presented us with a fine paper, Meyer [5], on practical problems and ob-stacles to inflation targeting in the U.S., a very suitable paper for this great conference at the St. Louis Fed. I find it a very thoughtful paper with many good points. I agree with most of the points Larry makes, I hope many people will read the paper and, in particular, take seriously his proposal for inflation targeting in the U.S. However, one issue that I believe Larry puts too much weight on is his pet idea, the distinction between a dual and hierarchical mandate. I do not believe this distinction is very useful. We are all flexible inflation targeters now. More precisely, we are all talking about an intertemporal loss function for monetary policy consisting of the expected discounted sum of present and future period losses, that is, of the form Et ∞X τ=0 (1 − δ)δτLt+τ, where the period loss function is typically given b