Inflation Targeting: Lessons from Four Countries

Mishkin, Frederic S.; Posen, Adam S.

doi:10.3386/w6126

Cited by 177 publications

(142 citation statements)

References 18 publications

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“…Studying the first of these issues, Mishkin and Posen (1997) find that IT has proved an effective 'strategy' in the fight against inflation, especially in maintaining the benefits of registering low inflation levels. These authors base their argument on the premise that whenever IT was adopted, the countries experienced inflation rates and interest rates, which were lower than the magnitudes simulated with unrestricted VARs, while no major effect is apparent on the output.…”

Section: Evidence Of It Impact On Levels and Persistence Of Inflationmentioning

confidence: 99%

Inflation Targeting: Assessing the Evidence

Angeriz

Arestis

2007

Issues in Finance and Monetary Policy

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The aim of this chapter is to deal with the empirical aspects of the 'new' monetary policy framework, known as Inflation Targeting. We review the evidence for both developed and emerging economies. The emphasis, though, is on emerging economies, which can be thought of as preparing the ground for the chapter to follow that concentrates on the experience with inflation targeting in Brazil. The results gathered in this study demonstrate that although Inflation Targeting has gone hand-in hand with low inflation, it is very far from declaring the strategy a resounding success. The evidence produced in this chapter suggests that non-Inflation-Targeting central banks have also been successful on this score. At a general level this chapter should be read as providing the necessary prolegomena for the chapter that follows, which concentrates crucially on the Brazilian experience. JEL Classification: E31, E52 IntroductionInflation Targeting (IT) as a policy framework, designed to tame inflation, has been with us since the early 1990s. Recent work makes the point that a significant number of countries adopted this strategy, and the number is growing. For example, Sterne (2002, Appendix A) suggests that 54 countries pursued one form or another of IT by 1998, compared with only 6 in 1990. A more recent study (IMF, 2005) suggests that 21 countries (8 developed and 13 emerging) are now clear inflation targeters, pursuing a full-fledged IT strategy (FFIT in short). Indeed, a number of other countries are seriously considering the adoption of this strategy. Many studies have attempted to examine empirically the degree and extent of the impact of IT on inflation in various countries. We review this literature in what follows and conclude that the available empirical evidence produces mixed results, although the case with developing countries is less clear-cut.

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Section: Evidence Of It Impact On Levels and Persistence Of Inflationmentioning

confidence: 99%

Inflation Targeting: Assessing the Evidence

Angeriz

Arestis

2007

Issues in Finance and Monetary Policy

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“…5. Credibility development based on fulfilment of inflation targets [19]. "Inflation targeting is a framework for monetary policy characterized by the public announcement of official quantitative targets (or target ranges) for the inflation rate over one or more time horizons, and by explicit acknowledgement that low, stable inflation is monetary policy's primary long-run goal" [4, p. 4].…”

Section: Decrease In Euroisationmentioning

confidence: 99%

Monetary and financial prerequisits of higher growth rates in Serbia

Šoškić¹

2017

Ekonomika preduzeca

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SažetakSrbija je u procesu fundamentalne promene svoje privredne structure. Prethodni model privrednog rasta završio se sa globalnom finansijskom krizom 2007/2008 koja je otkrila neodrživu prirodu rasta baziranog na uvozu i potrošnji koji je bio na delu od 2000-te godine. Potreban je preokret u pravcu investicija i izvoza, uz veću konkurentnost i glavninu rasta u razmenljivom delu BDPa. Od 2008. godine, međutim, Srbija je manjeviše u privrednoj stagnaciji,prošavši od tada kroz tri recesione godine. Investicije su još uvek nedovoljne i privredni rast je ispod očekivanja. Fiskalna konsolidacija je tokom 2016. godine počela da daje važne rezultate, uz postepeno oživljavanje rasta ali još uvek ispod regionalnog proseka. Postoji li prostor za unapređenja u domenu monetarne politike i funkcionisanja finansijskog sistema, koja mogu da daju dodatni podsticaj novom razvojnom modelu zemlje? Ovaj rad ima nameru da se bavi ovim pitanjima i da analizira konkretne probleme trenutnog stanja monetarne politike i finansijskog sistema u Srbiji. U radu se daju konkretne preporuke za svaku oblast mogućih unapređenja koje bi srpski privredni rast mogle podstaknudi u pravcu viših i i održivih stopa u narednim godinama.Ključne reči: monetarna politika, finansijski system, održivi ekonomski rast, investicije. AbstractSerbia is in a process of a fundamental shift in its economic structure. Prior growth model has ended with the global financial crisis of 2007/2008 which has revealed an unsustainable nature of import and consumption based economic growth that has been in place since the beginning of the century. A shift towards investments and exports, with higher competiveness and most of the growth coming from tradable part of the GDP is needed. Ever since 2008, however, Serbia is in, more or less, economic stagnation, with three recessionary years. Investments are still inadequate and growth is below expectations. Fiscal consolidation has started to give important results in 2016, with growth gradually recovering but still below regional average. Is there room for improvement in the domain of monetary policy and functioning of the financial system that can give additional impetus to this new growth model? This paper is attempting to shed more light on these issues and to analyze specific problems of monetary economics and financial system status quo in Serbia. Specific recommendations are given for each area of possible improvements that could lead Serbia's economic growth towards higher and sustainable rates in the following years.

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“…The European Commission would act as the "sound fiscal conscience" for national governments, and public debates in national Parliaments would trigger media coverage sufficient to provide adequate information to voters. Just as our modelling approach is inspired to the theoretical analysis of flexible inflation targeting schemes, our proposal borrows from empirical evidence on the behaviour of central banks that strengthen their reputation and protect their independence (Mishkin and Posen, 1997;Mishkin, 2000).…”

Section: Introductionmentioning

confidence: 99%

A simple and flexible alternative to Stability and Growth Pact deficit ceilings. Is it at hand?

Muscatelli

Natale

Tirelli

2012

European Journal of Political Economy

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We use a simple theoretical model of a monetary union where myopic discretionary fiscal policies generate excessive debt accumulation in steady state and inefficiently delayed debt adjustment following a shock. We advocate the adoption of a flexible debt targeting approach. By setting a long-term debt target and by raising the political cost associated to deviations from the optimal pace of debt reversal following a shock¸ institutional design induces the fiscal policymaker to implement unbiased discretionary responses to shocks. Since the power to discipline fiscal policymakers rests in the hands of national voters, this outcome can be achieved by increasing the transparency of the decision-making process, where national voters understand the long-term consequences of fiscal policies. In practice, we call for clearer and more focused supervision tasks for the European Commission and for a more active role of national Parliaments whenever a disagreement arises between the Commission and a national government.

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Inflation Targeting: Lessons from Four Countries

Cited by 177 publications

References 18 publications

Inflation Targeting: Assessing the Evidence

Inflation Targeting: Assessing the Evidence

Monetary and financial prerequisits of higher growth rates in Serbia

A simple and flexible alternative to Stability and Growth Pact deficit ceilings. Is it at hand?

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