Alan Greenspan, the confidence strategy

Vol. 26 No. 4 (2006)

Jul-Sep / 2006
Published July 1, 2006

How to Cite

Heron, Edwin Le. 2006. “Alan Greenspan, the Confidence Strategy”. Brazilian Journal of Political Economy 26 (4):502-17.

Alan Greenspan, the confidence strategy

Edwin Le Heron
Institute of Political Studies, Bordeaux, France — CRECQSS — President of the French Association for the Development of Keynesian Studies (ADEK).
Brazilian Journal of Political Economy, Vol. 26 No. 4 (2006), Jul-Sep / 2006, Pages 502-517


To evaluate the Greenspan era, we nevertheless need to address three questions: Is his success due to talent or just luck? Does he have a system of monetary policy or is he himself the system? What will be his legacy? Greenspan was certainly lucky, but he was also clairvoyant. Above all, he has developed a profoundly original monetary policy. His confidence strategy is clearly opposed to the credibility strategy developed in central banks and the academic milieu after 1980, but also inflation targeting, which today constitutes the mainstream monetary policy regime. The question of his legacy seems more nuanced. However, Greenspan will remain ‘for a considerable period of time’ a highly heterodox and original central banker. His political vision, his perception of an uncertain world, his pragmatism and his openness form the structure of a powerful alternative system, the confidence strategy, which will leave its mark on the history of monetary policy.

JEL Classification: E42, E50, E52, E58, E61, E65, N12.

Keywords: Monetary policy credibility confidence fedspeak uncertainty Taylor rule