Inflation Targeting in Emerging Market Economies

Arminio Fraga, Ilan Goldfajn and André Minella ()

No 10019, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper assesses inflation targeting in emerging market economies (EMEs), and develops applied prescriptions for the conduct of monetary policy and inflation-targeting design in EMEs. We verify that EMEs have faced more acute trade-offs higher output and inflation volatility and worse performance than developed economies. These results stem from more pronounced external shocks, lower credibility, and lower level of development of institutions in these countries. In order to improve their performance, we recommend high levels of transparency and communication with the public and the development of more stable institutions. At an operational level, we propose a procedure that a central bank under inflation targeting can apply and communicate when facing strong supply shocks, and suggest a monitoring structure for an inflation-targeting regime under an IMF program.

JEL-codes: E31 E52 (search for similar items in EconPapers)
Date: 2003-10
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Note: IFM ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (212)

Published as Fraga, Arminio, Ilan Goldfajn and André Minella. NBER Macroeconomics Annual, Vol. 18. Chicago: University of Chicago Press, 2003.
Published as Inflation Targeting in Emerging Market Economies , Arminio Fraga, Ilan Goldfajn, André Minella. in NBER Macroeconomics Annual 2003, Volume 18 , Gertler and Rogoff. 2004

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Related works:
Chapter: Inflation Targeting in Emerging Market Economies (2004)
Working Paper: Inflation Targeting in Emerging Market Economies (2003)
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