Working Paper: CEPR ID: DP3074
Authors: Jeffrey D. Amato; Stefan Gerlach
Abstract: Starting in the early 1990s, several emerging market and transition economies (EMEs) have adopted inflation targeting (IT). In this Paper we discuss a number of issues that arise in this context: (a) the definition of IT, (b) the role of preconditions for IT, (c) the use of intermediate exchange rate targets and (d) the specification of inflation targets. Our overall conclusion is that, suitably modified, IT is a useful policy strategy for EMEs.
Keywords: central banks; inflation targeting; monetary policy
JEL Codes: E42; E50; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| adoption of IT (L86) | better inflation control (E31) |
| adoption of IT (L86) | price stability (E31) |
| preconditions (C62) | successful IT adoption (L86) |
| exchange rate policies (F31) | effectiveness of IT (L86) |
| credibility of central bank (E58) | better inflation outcomes (E31) |