IMF Working Papers

Inflation Targeting Regimes

By Alina Carare, Mark R. Stone

January 1, 2003

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Alina Carare, and Mark R. Stone Inflation Targeting Regimes, (USA: International Monetary Fund, 2003) accessed October 12, 2024
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 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.

Subject: Banking, Emerging and frontier financial markets, Exchange rates, Financial markets, Foreign exchange, Inflation, Inflation targeting, Monetary policy, Price stabilization, Prices

Keywords: Africa, Central bank, Central bank description, Central bank financing, EIT country, Emerging and frontier financial markets, Exchange rates, FFIT country, FFIT emerging market country, Financing restriction, Global, Inconsistency problem, Inflation, Inflation target, Inflation target classification, Inflation targeting, Inflation targeting central banks, Inflation targeting monetary policy framework, Inflation targeting objective, Inflation variability, Inflation-targeting credibility, Monetary policy framework, Price stability, Price stabilization, Regime switch, WP

Publication Details

  • Pages:

    37

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2003/009

  • Stock No:

    WPIEA0092003

  • ISBN:

    9781451842616

  • ISSN:

    1018-5941