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Author/Editor:
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Yao, James Y. ; Porter, Nathaniel John ; International Monetary Fund. African Dept. ; International Monetary Fund. Finance Dept.
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Publication Date:
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September 01, 2005
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Electronic Access:
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Free Full text
(PDF file size is 424KB).
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
This paper develops a new macrofinance model for small open economies, allowing the investigation of Mauritius's experience with 'inflation targeting lite' as described in Stone (2003). It finds that this monetary policy regime has been associated with a general reduction in inflation, principally through a reduction in inflation expectations. The credibility the Bank of Mauritius has established with its 'inflation targeting lite' regime has allowed it to shift from an emphasis on exchange rate targeting towards inflation targeting. By estimating a model in which the yield curve is modeled explicitly we are able to obtain estimates of inflation expectations.
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Order a print copy
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Series:
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Working Paper No. 05/172
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Subject(s):
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Economic models | Exchange rate management | Exchange rate regimes | Inflation targeting | Mauritius
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Author's Keyword(s):
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Inflation targeting | small open economies | managed exchange rates |
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