Improving the Monetary Policy Frameworks in Central America

Stephanie Medina Cas, Alejandro Carrion-Menendez and Florencia Frantischek

No 2011/245, IMF Working Papers from International Monetary Fund

Abstract: Several Central American (CADR) countries with independent monetary policies are strengthening their monetary frameworks and some have implemented or are moving towards inflation targeting (IT) regimes. Strengthening the monetary policy frameworks of CADR is key to improving the effectiveness of monetary policy. The paper reviews the literature on the reforms needed for strengthening the monetary policy frameworks, and examines the experiences of IT countries, Chile, Peru, and Uruguay to help distill lessons for CADR. It also constructs an index to measure the relative strength of the monetary policy framework of CADR countries.

Keywords: WP; recapitalization plan; CADR country; instrument independence; government inflation-indexed bond; benchmark yield curves; monetary policy; inflation targeting; Central America; Latin America; central bank of Guatemala; central bank governor; central bank recapitalization plan; central bank instrument independence; Monetary policy frameworks; Exchange rate flexibility; Inflation; Central bank autonomy; Price stabilization; South America (search for similar items in EconPapers)
Pages: 38
Date: 2011-10-01
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Citations: View citations in EconPapers (2)

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