Flexible Exchange Rate with Inflation Targeting in Chile: Experience and Issues

Andrea Tokman (), Rodrigo Valdés and Jose De Gregorio

No 1558, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: The first five years of the flexible exchange rate and inflation targeting regime in Chile have shown positive results. Inflation is under control, the exchange rate has moved with the external conditions, monetary policy has been countercyclical and the cycle has apparently smoothened. Even though exchange rate volatility has increased, as expected with a flexible regime, this has also happened in other countries with similar characteristics. This increased volatility has lower extreme real exchange rate valuations than in the past, as is also seen in other countries with alternative exchange rate regimes. Important progress in derivatives market deepening, as well in a lower pass-through from the exchange rate to inflation, have contributed to increasing the credibility and feasibility of the current policy framework, while minimizing potential costs derived from that framework.

Keywords: WP-540 (search for similar items in EconPapers)
Date: 2005-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://publications.iadb.org/publications/english ... ience-and-Issues.pdf (application/pdf)

Related works:
Working Paper: Flexible Exchange Rate with Inflation Targeting in Chile: Experience and Issues (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:1558

Access Statistics for this paper

More papers in IDB Publications (Working Papers) from Inter-American Development Bank Contact information at EDIRC.
Bibliographic data for series maintained by Felipe Herrera Library ().