This paper deals with a “new” type of monetary policy making: Inflation Targeting (IT). It attempts to identify reasons for which countries might be inclined to adopt this framework for monetary policy. By reviewing recent experience of inflation targeting countries, the paper outlines the major operational arguments regarding the implementation of IT. Another important issue is the applicabili...

today, the discussion of regularity monetary policy in achieving inflation and output gap stabilization is important. in this paper, we investigated the persistence of the output gap in iran economy and then by using a hybrid new keynesian model based on quarterly data for 1990:1- 2011:3. we compared three alternative instrumental rules in monetary policy for iran economy. the results indicated...

The justification for inflation targeting rests on three core propositions. The first is called ‘lean against the wind’, which refers to fact that the monetary authority contracts (expands) aggregate demand below capacity when the actual rate of inflation is above (below) target. The second is ‘the divine coincidence’, which means that stabilizing the rate of inflation around its target is tant...

The representatives at this conference from inflation targeting central banks—including Brazil, Canada, Chile, Czech Republic, New Zealand, Korea, Thailand, and the United Kingdom—have provided us with a useful overview of how inflation targeting works in practice. These experiences will be very important as other countries, including Indonesia, consider inflation targeting. We have also had so...

The purpose of present paper was to examine the relationship between central bank independence and inflation rate in Iran over 1960-2008. First, central bank independence has been accomplished through three indices including legal and real CBI indices and turnover rate of central bank governor index. Then, Augmented Dickey-Fuller test for model stationary of variables has been done by applying ...

Many countries in the developing world have adopted an approach to monetary policy that focuses on maintaining a low level of inflation, to the exclusion of other important objectives such as employment generation, increasing investment or reducing poverty, despite the widespread evidence that moderate levels of inflation have few or no costs. Some have even adopted formal " inflation targeting...

Today many argue that there appears to be an epidemic case of “fear of floating”. Some have further claimed that credible inflation targeting – a popular regime choice today – and fear of floating are identical regimes. This paper takes a different view. We modify Calvo and Reinhart’s (2002) approach to analyze the behavior of exchange rates, reserves, interest rates and inflation across 88 exc...

This study examines the treatment effects of inflation targeting on exchange rate volatility across a large panel 91 (36 targeting) countries over 1985-2019 period annual basis. We apply propensity score matching methods to developed, developing, and high-income non-inflation countries. Our results reveal that, average, adopting policy exerts lower in all sample developing economies. However, s...