Truman (2003) provides the current list (see page 1), and a discussion of inflationtargeting in practice. The literature on inflation targeting is vast; interesting discussions includeFaust and Henderson (2003) and Bernanke et al. (1999).
The New Neoclassical Synthesis adds nominal inertia to the Real Business Cycle model.Goodfriend and King (1997) outlined the synthesis, and gave it the name. Woodford (2003) provides a masterful introduction to this class of models. The NNS was quickly adopted as aframework for monetary policy evaluation, and a large literature has ensued.
Inflation targeting is currently in vogue; some twenty central banks have now adopted it asa framework for implementing monetary policy.
King and Wolman (1999) showed that strict priceinflation targeting (that is, fixing the price level) achieves the constrained optimum in a model with price inertia, thereby providing a rationale for inflation targeting within the class of New Neoclassical Synthesis (NNS) models.
However, Erceg, Henderson and Levin (2000) (EHL)showed that strict inflation targeting is no longer optimal when wage inertia is added to the model;the central bank should also respond to movements in the nominal wage (or the output gap). In fact,when wage inertia is the only nominal inertia in the model, the King and Wolman result is com- pletely turned around; the constrained optimum can be achieved by strict wage inflation targeting(that is, fixing the nominal wage level).The intuition for such results is not new. In an earlier class of models with fixed wages andflexible prices, the optimal monetary policy moved quantities so as to make nominal wage move-ments unnecessary. In the language of Canzoneri, Henderson and Rogoff (1983), monetary policymade wage flexibility “redundant”; it saved wage setters the costs (whatever they are) of indexingwages to current information. In the Canzoneri, Henderson and Rogoff model, monetary policyaccomplished this by making the notional wage equal to the preset wage; in NNS models, wheresome firms have flexible wages while others have preset wages, monetary policy can accomplish