Inflation Targeting and Communication: It Pays Off to Read Inflation Reports

Author/Editor: Bulir, Ales ; Smídková, Katerina ; Kotlán, Viktor ; Navrátil, David
Publication Date: October 01, 2008
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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: Inflation-targeting central banks have a respectable track record at explaining their policy actions and corresponding inflation outturns. Using a simple forward-looking policy rule and an assessment of inflation reports, we provide a new methodology for the empirical evaluation of consistency in central bank communication. We find that the three communication tools-inflation targets, inflation forecasts, and verbal assessments of inflation factors contained in quarterly inflation reports-provided a consistent message in five out of six observations in our 2000-05 sample of Chile, the Czech Republic, Hungary, Poland, Thailand, and Sweden.
Series: Working Paper No. 08/234
Subject(s): Inflation targeting | Central banks | Economic forecasting | Monetary policy | Transparency | Emerging markets | Chile | Czech Republic | Hungary | Poland | Thailand | Sweden

Author's Keyword(s): Inflation targeting | forecasting | monetary policy | transparency | emerging markets
Publication Date: October 01, 2008
Format: Paper
Stock No: WPIEA2008234 Pages: 42
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