## A New Taxonomy of Monetary Regimes

_IMF Working Papers, October 1, 2004_

## Source details

**Canonical URL:** [A New Taxonomy of Monetary Regimes](https://www.imf.org/en/publications/wp/issues/2016/12/31/a-new-taxonomy-of-monetary-regimes-17690)

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## Bibliographic details
- Authors: Ashok Bhundia, Mark R. Stone
- Published: October 1, 2004
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451859744.001

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### Overview
- This paper proposes a new taxonomy of monetary regimes defined by the choice and clarity of the nominal anchor.
- The taxonomy "captures the commitment-discretion tradeoffs that lie at the heart of choosing a monetary regime."
- During the last 15 years the world has moved toward monetary regimes with less discretion.
- Empirical analysis suggests that country regime choices reflect the level of financial and economic development and recent inflation history.

### Proposed Taxonomy (regimes listed in the paper)
- (i) monetary nonautonomy
- (ii) weak anchor
- (iii) money anchor
- (iv) exchange rate peg
- (v) full-fledged inflation targeting
- (vi) implicit price stability anchor
- (vii) inflation targeting lite

### Key Findings
- The taxonomy is defined by the choice and clarity of the nominal anchor.
- The taxonomy captures the commitment-discretion tradeoffs inherent in choosing a monetary regime.
- Over the last 15 years, there has been a global shift toward regimes with less discretion.
- Country regime choices are correlated with:
  - the level of financial development,
  - the level of economic development,
  - recent inflation history.

### Empirical Analysis (summary)
- Empirical analysis in the paper links regime choices to observable country characteristics, specifically financial and economic development indicators and recent inflation history.
- The analysis supports the view that regime selection is not uniform across countries but reflects these development and historical-inflation conditions.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/a-new-taxonomy-of-monetary-regimes-17690_