Inflation targeting has become the predominant monetary approach across the globe. In this paper, we examine the inflation targeting experience in developing countries. We estimate the effects of inflation targeting on macroeconomic performance in these economies. The approach is based on the methodology applied by Pétursson (2005) which uses panel data to assess the effects of inflation target...

This paper uses a structurally estimated macroeconometric model, denoted the MC model, to evaluate inflation targeting in the United States. Various interest rate rules are tried with differing weights on inflation and output, and various optimal control problems are solved using differing weights on inflation and output targets. Price-level targeting is also considered. The results show that 1...

Over the past decade, a number of countries have adopted an inflation-targeting framework for the conduct of monetary policy. The majority of these have been developed countries, although Chile and Israel have also pursued some form of inflation targeting for the best part of ten years. In part spurred on by the successful economic performance of the countries that have adopted inflation target...

This paper uses a structurally estimated macroeconometric model, denoted the MC model, to evaluate inflation targeting in the United States. Various interest rate rules are tried with differing weights on inflation and output, and various optimal control problems are solved using differing weights on inflation and output targets. Price-level targeting is also considered. The results show that 1...

Several countries around the world have adopted the inflation targeting regime for monetary policy. Despite the growing literature on the issue, it is not clear whether developing and emerging countries can improve their economic performance by adopting inflation targeting. This working paper examines the extent to which macroeconomic policies anchored to inflation targeting affect unemployment...

In the 1990s, a number of countries adopted explicit inflation targets as the goal of monetary policy, following the example of New Zealand and Canada.1 The targets were introduced to make more concrete the authorities’ commitment to achieve and maintain low rates of inflation in their economies. This paper provides a brief overview of the inflation-targeting programs of four countries—New Zeal...

Given the increasing importance of achieving low and stable inflation rate during the last decades, adopting the most suitable practices to implement monetary policies has always been of concern by monetary authorities of different countries. Inflation targeting (IT) regime is the most recent strategy to guide monetary policies that have been introduced following the occurrence of exchange rate...

Do political and fiscal decentralization make it easier or harder to control inflation? If high inflation reflects the time inconsistency problem, devolving power might restrict the center’s ability to renege on promises of monetary stability, thus reducing inflation. If inflation results from failure to coordinate on a stabilization plan, devolving power to numerous regional governments should...

The paper looks at the evolution of monetary policy in industrialized countries by evaluating two monetary policy strategies, monetary targeting and inflation targeting. The paper provides brief case studies of countries that have adopted these two strategies and draws a set of lessons. The experience with monetary targeting suggests that although it was successful in controlling inflation in S...

Andy Rose’s paper provides important evidence on the impact on how monetary regimes fared during the recent global financial crisis. The paper has two basic results. First, it shows that the two monetary regimes, hard fixing and inflation targeting, have become surprisingly durable and were able to withstand the stress of the shocks from the global financial crisis. Before the global financial ...