Exchange Rate, Monetary, and Inflation Targets

ABSTRACT Since the beginning of the Quantitative Theory of Money by David Hume, the relation between money and price level has been analyzed by monetary economists. Nowadays the search for price stability has induced the policymakers to adopt one of three monetary regimes: fixed exchange rate, monetary targeting, or inflation targeting. The present paper makes a comparative analysis among these possibilities highlighting the advantages and disadvantages that belong to each monetary regime.