Inflation Targeting Regimes

Alina Carare and Mark Stone

No 2003/009, IMF Working Papers from International Monetary Fund

Abstract: This paper classifies countries that define their monetary policy framework by an inflation target into full-fledged inflation targeters, eclectic inflation targeters and inflation targeting lite regimes. This classification is based on indicators of the clarity and credibility of the commitment to the inflation target. The three regimes can be viewed as corresponding to different welfare maximizing combinations of policy objectives, each conditional on a country's "endowed" level of credibility. The credibility of the regimes is related empirically to structural differences. Policy implications are drawn, especially for emerging market countries aiming at full-fledged inflation targeting.

Keywords: WP; inflation target; EIT country; regime switch; inflation-targeting credibility; Monetary policy framework; inflation targeting; central bank; price stability; FFIT country; financing restriction; central bank financing; inflation targeting monetary policy framework; inflation targeting objective; inflation target classification; inflation targeting central banks; inflation variability; inconsistency problem; FFIT emerging market country; central bank description; Inflation; Emerging and frontier financial markets; Price stabilization; Exchange rates; Africa; Global (search for similar items in EconPapers)
Pages: 37
Date: 2003-01-01
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Citations: View citations in EconPapers (42)

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Journal Article: Inflation targeting regimes (2006)
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