Goodhart's Law

Definition

Economics

  • noun the law proposed by Charles Goodhart, Professor at the London School of Economics and formerly Chief Adviser to the Bank of England and a member of the Monetary Policy Committee, that when a measure becomes a target it ceases to be a measure. So if a central bank has a money supply target to aim for, then the measure of money used will soon have no meaning. It also applies to inflation targets.
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