, “ macroeconomics with financial frictions : a survey ”, nber working paper 18102. bullard, j., ( 2013 ), “ the global battle over central bank independence ”, presentation at the nabe panel discussion : “ federal reserve independence in the aftermath of the financial crisis : should we be worried? ”, aea / assa annual meeting, san diego, california, 4 january. da costa, p., ( 2013 ), “ central bank independence is a bit like marriage : israel ’ s fischer ”, blog post, macroscope reuters, 18 april, 2013, http : / / blogs. reuters. com / macroscope / 2013 / 04 / 18 / central - bank - independence - is - a - bit - like - marriage - israels - fischer / de carvalho filho, i. e., ( 2011 ), “ 28 months later : how inflation targeters outperformed their peers in the great recession ”, the b. e. journal of macroeconomics 11 ( 1 ). frankel. j., ( 2012 ), “ the death of inflation targeting ”, column in vox, 19 june, http : / / www. voxeu. org / article / inflation - targeting - dead - long - live - nominal - gdp - targeting gerlach, s., ( 2013 ) “ is inflation targeting passe? ” in reichlin, l. and r. baldwin, ( ed. ), “ is inflation targeting dead? central banking after the crisis ”, centre for economic policy research. goodhart, c. a. e., m. baker and j. ashworth, ( 2013 ), “ monetary targetry : might carney make a difference? ”, in reichlin, l. and r. baldwin, ( ed. ), “ is inflation targeting dead? central banking after the crisis ”, centre for economic policy research. imf ( 2013 ), “ the dog that didn ’ t bark : has inflation been muzzled or was it just sleeping? ” chapter 3, in the imf world economic outlook, april 2013. king, m., ( 2013 ), “ monetary policy : many targets, many instruments. where do we stand? ” speech at the imf conference “ rethinking macro policy ii : first steps and early lessons ”, washington dc, 16 april. krugman, p., ( 2013 ), “ missing deflation

allocated for this purpose, such as the policy rate and other potential means. this is one example of the so - called lucas critique, which says that empirical relationships can change if the economic policy changes as the economic policy affect agents ’ expectations. see da costa ( 2013 ). bis central bankers ’ speeches inflation targeting let me go on to the other area i intend to discuss today – inflation targeting. as i mentioned earlier, the central banks ’ independence and inflation targeting can be regarded as inseparable. they are both central parts of the monetary policy framework that was regarded as very successful, at least up until the crisis. independence and inflation targeting can reinforce one another in both good and bad ways. increased independence can contribute to greater credibility, which in turn can make it easier to attain the inflation target. a period of low and stable inflation creates confidence and legitimacy for inflation targeting and increases the political support for independence, and so on. and vice versa, a reduction in confidence in the inflation target may make inflation expectations, and thereby actual inflation, more difficult to control. inflation targeting is then perceived as unsuccessful, the political support for this policy and for central bank independence thus declines, credibility is further undermined, and so on. criticism : inflation targeting could not prevent the crisis and has difficulty getting us out of it inflation targeting has also been questioned after the crisis and also from slightly different starting points. 9 two main types of criticism have been expressed. 10 firstly, some say that inflation targeting prior to the crisis focussed too heavily on its traditional targets, particularly price stability and therefore missed – or perhaps even contributed to – the credit - driven property bubbles that arose in a number of countries. secondly, some say that inflation targeting does not appear particularly suited to helping countries out of a crisis and may even make it more difficult to conduct a sufficiently expansionary policy. it should therefore be replaced with something else. i think that this criticism is rather unfair. as i see it, there was, perhaps, a hope that inflation targeting could prevent financial crises, but one can hardly say that it was part of the deal. the main purpose of inflation targeting has been to supply a credible nominal anchor for the economy. 11 it has succeeded in this purpose. looking at sweden, i think it is quite clear that the introduction of inflation targeting in connection with the crisis in the early 1990s was one of the most important reasons why the swedish economy has developed so well since then. however, financial crises can also arise in environments