Modalities of Moving to Inflation Targeting in Armenia and Georgia

Author/Editor:

International Monetary Fund

Publication Date:

June 1, 2007

Electronic Access:

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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

Summary:

This paper reviews the current monetary and exchange rate policy frameworks in Armenia and Georgia, and the challenges associated with the choice of a credible nominal anchor in the context of large nominal and real shocks. The paper makes a case for a gradual transition to full-fledged inflation targeting (FFIT) in both countries in the medium term. The implications of this option are examined from various angles. In particular, the monetary transmission mechanisms and compliance with major institutional prerequisites for successful FFIT adoption are analyzed. Based on this analysis, the paper identifies a series of short- and medium-term recommendations, drawing on the experience of emerging market countries that successfully moved to FFIT.

Series:

Working Paper No. 07/133

Subject:

English

Publication Date:

June 1, 2007

ISBN/ISSN:

9781451866971/1018-5941

Stock No:

WPIEA2007133

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

36

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