Inflation Targeting : What is the Meaning of the Bottom of the Band?

Author/Editor:

Eric V. Clifton

Publication Date:

December 1, 1999

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Policy Dicussion 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 investigates the meaning of the bottom of target bands in inflation targeting regimes. It is argued that the design of lower limits on target bands, if not done with care, can lead to a lack of transparency, potentially confusing markets about how the authorities will react to a fall in inflation. After first discussing the conceptual issues, the paper then examines the experience with target bands in New Zealand, Israel and Canada and explores how the conceptual issues have played out in practice.

Series:

Policy Discussion Paper No. 99/8

Subject:

English

Publication Date:

December 1, 1999

ISBN/ISSN:

9781451970906/1934-7456

Stock No:

PPIEA0081999

Format:

Paper

Pages:

24

Please address any questions about this title to publications@imf.org