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Inflation Targets in a Global Context

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Author Info
Gabriel Sterne
Abstract

Inflation targeting has become a global framework, used by countries of many different types and in all the continents of the world. To assess its global contribution, this paper uses one of the broadest ever surveys of monetary policy frameworks to construct an overall picture from the individual jigsaw pieces of framework characteristics. The jigsaw is made of targets and other measures of policy reaction, institutional characteristics such as independence, accountability and transparency, and analytical capacities within the central bank. The paper notes that the use of inflation targets has spread very rapidly in the 1990s, far more so than has the number of "inflation targeting" frameworks. The analysis focuses on the flexible use of inflation (and money) targets, and how these relate to indicators of each of central bank reaction functions, independence, accountability, transparency, and analytical methods. The use of targets appears to have built a strong momentum towards explanation of policy, and the use of inflation targets in particular has provided a vehicle for communication between central banks and governments and the private sector.

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Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 114.

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Date of creation: Nov 2001
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Handle: RePEc:chb:bcchwp:114

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Paul R. Masson, 1997. "The Scope for Inflation Targeting in Developing Countries," IMF Working Papers 97/130, International Monetary Fund.
  2. Stanley Fischer & Ratna Sahay, 2000. "The Transition Economies After Ten Years," IMF Working Papers 00/30, International Monetary Fund.
  3. Alexander W. Hoffmaister, 1999. "Inflation Targeting in Korea - An Empirical Exploration," IMF Working Papers 99/7, International Monetary Fund.
    Other versions:
  4. Robert F. Westcott & Peter F. Christoffersen, 1999. "Is Poland Ready for Inflation Targeting?," IMF Working Papers 99/41, International Monetary Fund.
  5. Stanley Fischer & Ratna Sahay, 2000. "The Transition Economies After Ten Years," NBER Working Papers 7664, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Walsh, Carl E, 1995. "Optimal Contracts for Central Bankers," American Economic Review, American Economic Association, vol. 85(1), pages 150-67, March. [Downloadable!] (restricted)
  7. Jon Faust & Lars E.O. Svensson, 1999. "The equilibrium degree of transparency and control in monetary policy," International Finance Discussion Papers 651, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
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  8. G. C. Lim & Guy Debelle, 1998. "Preliminary Considerations of an Inflation Targeting Framework for the Philippines," IMF Working Papers 98/39, International Monetary Fund.
  9. Carlo Cottarelli & Curzio Giannini, 1997. "Credibility Without Rules," IMF Occasional Papers 154, International Monetary Fund.
  10. Nicoletta Batini & Andrew Haldane, 1999. "Forward-Looking Rules for Monetary Policy," NBER Chapters, in: Monetary Policy Rules, pages 157-202 National Bureau of Economic Research, Inc. [Downloadable!]
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  11. Georgios Chortareas & David Stasavage & Gabriel Sterne, . "Does it pay to be transparent? International evidence from central bank forecasts," Bank of England working papers 143, Bank of England. [Downloadable!]
    Other versions:
  12. N. Gregory Mankiw, 1994. "Monetary Policy," NBER Books, National Bureau of Economic Research, Inc, number greg94-1.
  13. Lavan Mahadeva & Katerina Smidkova, 2004. "Modelling transmission mechanism of monetary policy in the Czech Republic," Macroeconomics 0402032, EconWPA. [Downloadable!]
  14. Alan S. Blinder, 1994. "On Sticky Prices: Academic Theories Meet the Real World," NBER Chapters, in: Monetary Policy, pages 117-154 National Bureau of Economic Research, Inc. [Downloadable!]
  15. Gerlach, Stefan, 1999. "Who targets inflation explicitly?," European Economic Review, Elsevier, vol. 43(7), pages 1257-1277, June. [Downloadable!] (restricted)
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  1. J. Benson Durham, 2001. "Sacrifice ratios and monetary policy credibility: do smaller budget deficits, inflation-indexed debt, and inflation targets lower disinflation costs?," Finance and Economics Discussion Series 2001-47, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  2. corrinne ho & robert n mccauley, 2004. "Living with flexible exchange rates:," International Finance 0411003, EconWPA. [Downloadable!]
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