On the credibility of inflation-targeting regimes in Latin America

Rodrigo Mariscal, Andrew Powell and Pilar Tavella

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Inflation targeting has become popular in emerging economies. Eight countries in Latin America adopted this regime and were successful in bringing inflation down. However, continuing success depends on the credibility of the target. We interpret credibility as how tightly inflation expectations are anchored and develop a methodology to test the response to shocks. Inflation targets gained credibility over time, but when inflation rises above target, credibility suffers. Moreover, at the end of the sample, there is evidence of de-anchoring.

Keywords: inflation; monetary policy; Latin America (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2018-04-01
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Published in Economía, 1, April, 2018, 18(2), pp. 1 - 24. ISSN: 1529-7470

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http://eprints.lse.ac.uk/123156/ Open access version. (application/pdf)

Related works:
Journal Article: On the Credibility of Inflation-Targeting Regimes in Latin America (2018)
Working Paper: On the Credibility of Inflation Targeting Regimes in Latin America (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:123156

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