Disagreement about Future Inflation: Understanding the Benefits of Inflation Targeting and Transparency

Author/Editor:

Steve Brito ; Yan Carriere-Swallow ; Bertrand Gruss

Publication Date:

January 25, 2018

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

We estimate the determinants of disagreement about future inflation in a large and diverse sample of countries, focusing on the role of monetary policy frameworks. We offer novel insights that allow us to reconcile mixed findings in the literature on the benefits of inflation targeting regimes and central bank transparency. The reduction in disagreement that follows the adoption of inflation targeting is entirely due to increased central bank transparency. Since the benefits of increased transparency are non-linear, the gains from inflation targeting adoption have accrued mainly to countries that started from a low level of transparency. These have tended to be developing countries.

Series:

Working Paper No. 18/24

English

Publication Date:

January 25, 2018

ISBN/ISSN:

9781484339718/1018-5941

Stock No:

WPIEA2018024

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

18

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