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Inflation Targeting and Country Risk

Author : Mr.Armand Fouejieu

Publisher : International Monetary Fund

Page : 30 pages

File Size : 45,40 MB

Release : 2013-01-23

Category : Business & Economics

ISBN : 1475554710

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Book Description

The sovereign debt crisis in Europe has highlighted the role of country risk premia as a link between countries’ fiscal and external balances, financial conditions and monetary policy. The purpose of this paper is to estimate how adoption of inflation targeting (IT) affects spreads. It is hypothesized that country risk premia for IT countries (especially among emerging market economies) may be lower than for other countries owing to greater policy predictability and more stable long-term inflation. The findings suggest that IT reduces the risk premium, both through adoption of the IT regime, and through the observed track record in stabilizing inflation.



Inflation Targeting and Exchange Rate Management In Less Developed Countries

Author : Mr.Marco Airaudo

Publisher : International Monetary Fund

Page : 65 pages

File Size : 20,18 MB

Release : 2016-03-08

Category : Business & Economics

ISBN : 1513567438

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Book Description

We analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets. Our central finding is that management of the exchange rate greatly enhances the efficacy of inflation targeting. In a flexible exchange rate system, inflation targeting incurs a high risk of indeterminacy where macroeconomic fluctuations can be driven by self-fulfilling expectations. Moreover, small inflation shocks may escalate into much larger increases in inflation ex post. Both problems disappear when the central bank leans heavily against the wind in a managed float.



Monetary Policy Strategy

Author : Frederic S. Mishkin

Publisher : MIT Press

Page : 561 pages

File Size : 29,83 MB

Release : 2007

Category : Monetary policy

ISBN : 0262134829

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Book Description

This book by a leading authority on monetary policy offers a unique view of the subject from the perspectives of both scholar and practitioner. Frederic Mishkin is not only an academic expert in the field but also a high-level policymaker. He is especially well positioned to discuss the changes in the conduct of monetary policy in recent years, in particular the turn to inflation targeting. Monetary Policy Strategydescribes his work over the last ten years, offering published papers, new introductory material, and a summing up, "Everything You Wanted to Know about Monetary Policy Strategy, But Were Afraid to Ask," which reflects on what we have learned about monetary policy over the last thirty years. Mishkin blends theory, econometric evidence, and extensive case studies of monetary policy in advanced and emerging market and transition economies. Throughout, his focus is on these key areas: the importance of price stability and a nominal anch fiscal and financial preconditions for achieving price stability; central bank independence as an additional precondition; central bank accountability; the rationale for inflation targeting; the optimal inflation target; central bank transparency and communication; and the role of asset prices in monetary policy.



Statistical Implications of Inflation Targeting

Author : Mrs.Carol S. Carson

Publisher : International Monetary Fund

Page : 396 pages

File Size : 23,86 MB

Release : 2002-09-25

Category : Business & Economics

ISBN : 9781589061323

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Book Description

This book brings together the experience of central banks and national statistical agencies in countries that focus their monetary policy on inflation targets. Inflation targeting has led to a close interface between these two sets of institutions. When the performance of a central bank is measured in terms of specified price indices, which are usually compiled and disseminated by the national statistical agency, the role of national statistical agencies becomes central to the credibility of monetary policy. Data needs and uses have also shifted, with implications for national and international statistics compilation: market data have gained in importance; less emphasis is placed on traditional monetary aggregates; and greater attention is paid to timeliness, adherence to sound economic accounting standards, and other aspects of data quality.



Country Experiences with the Introduction and Implementation of Inflation Targeting

Author : Inci Ötker

Publisher : International Monetary Fund

Page : 46 pages

File Size : 24,19 MB

Release : 2009

Category : Business & Economics

ISBN :

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Book Description

This is the tenth chapter of a forthcoming monograph entitled, "On Implementing Full- Fledged Inflation-Targeting Regimes: Saying What You Do and Doing What You Say." It describes the experiences of a number of countries with the introduction and implementation of inflation targeting regimes. It discusses their motivation for introducing IT; how they fared in meeting the various conditions that some have argued are needed in advance of introducing IT; how they transitioned to a full-fledged IT framework and coordinated their preparations with other economic policies and reforms; the benefits they gained by adopting IT; the challenges they faced in implementation; and the lessons from their experiences.



Inflation Targeting and the Crisis

Author : Mr.Irineu E. de Carvalho Filho

Publisher : International Monetary Fund

Page : 24 pages

File Size : 18,7 MB

Release : 2010-02-01

Category : Business & Economics

ISBN : 1451963041

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Book Description

This paper appraises how countries with inflation targeting fared during the current crisis, with the goal of establishing the stylized facts that will guide and motivate future research. We find that since August 2008, IT countries lowered nominal policy rates by more and this loosening translated into an even larger differential in real interest rates relative to other countries; were less likely to face deflation scares; and saw sharp real depreciations not associated with a greater perception of risk by markets. We also find some weak evidence that IT countries did better on unemployment rates and advanced IT countries have had relatively stronger industrial production performance. Finally, we find that advanced IT countries had higher GDP growth rates than their non-IT peers, but find no such difference for emerging countries or the full sample.





The Inflation-Targeting Debate

Author : Ben S. Bernanke

Publisher : University of Chicago Press

Page : 469 pages

File Size : 43,51 MB

Release : 2007-11-01

Category : Business & Economics

ISBN : 0226044734

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Book Description

Over the past fifteen years, a significant number of industrialized and middle-income countries have adopted inflation targeting as a framework for monetary policymaking. As the name suggests, in such inflation-targeting regimes, the central bank is responsible for achieving a publicly announced target for the inflation rate. While the objective of controlling inflation enjoys wide support among both academic experts and policymakers, and while the countries that have followed this model have generally experienced good macroeconomic outcomes, many important questions about inflation targeting remain. In Inflation Targeting, a distinguished group of contributors explores the many underexamined dimensions of inflation targeting—its potential, its successes, and its limitations—from both a theoretical and an empirical standpoint, and for both developed and emerging economies. The volume opens with a discussion of the optimal formulation of inflation-targeting policy and continues with a debate about the desirability of such a model for the United States. The concluding chapters discuss the special problems of inflation targeting in emerging markets, including the Czech Republic, Poland, and Hungary.



Inflation Targeting and Financial Stability

Author : Michael Heise

Publisher : Springer

Page : 111 pages

File Size : 17,16 MB

Release : 2019-02-26

Category : Business & Economics

ISBN : 3030050785

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Book Description

Since the financial crisis of 2008/09, the world’s major central banks have been struggling to return their economies to higher growth and to reach their inflation targets. This concise book analyzes the importance of central bank policies for the economy, and specifically investigates the reasons why they have failed to steer inflation as desired. The author, the Chief Economist at Allianz SE, argues that, in an environment of great uncertainty concerning the pass-through of monetary stimulus to the economy, central banks should not focus too narrowly on inflation targets, but should increasingly take the side effects of their actions into account. In particular, he contends that they must seek to minimize the risk of financial booms and busts in order to maximize long-term growth and prosperity. Building on existing research and contributing to the current debate, the book offers a valuable reference guide and food for thought for policymakers, professionals and students alike.



Policy Conflicts and Inflation Targeting: The Role of Credit Markets

Author : Woon Gyu Choi

Publisher : International Monetary Fund

Page : 36 pages

File Size : 18,46 MB

Release : 2018-04-06

Category : Business & Economics

ISBN : 1484350510

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Book Description

This paper shows that stabilizing volatility in credit growth often conflicts with price stability: unusual credit expansions often occur when inflation is low relative to goals, and credit slumps often appear when inflation is overshooting. We find that central banks with inflation targeting (IT) are responsive to credit conditions in both advanced economies and emerging-market economies (EMEs). However, EMEs are more sensitive to inflation conditions, responding to credit growth only when consistent with IT. Macroprudential measures are also deployed to address credit growth volatility when orthodox policy moves would be inconsistent with IT, complementing monetary policy.