Is Inflation Targeting Still on Target? The Recent Experience of Latin America
AbstractThis paper reviews the recent experience of a half-dozen Latin American inflation targeting (IT) nations. Repeated and large deviations from the standard IT framework are documented: exchange market interventions have been lasting and widespread; the real exchange rate has often become a target of policy, though this target is seldom made explicit; a range of other non-conventional policy tools, especially changes in reserve requirements but occasionally taxes or restrictions on international capital movements, also came into common use. As in developed nations, during the 2008-2009 crisis issues of liquidity provision took center stage. A first evaluation of the emerging modified framework of monetary policy is also attempted. In general terms, the new approach seems to have been effective, at the very least since the region weathered the crisis reasonably well. But also, and perhaps more importantly, many questions remain about the desirability of non-conventional monetary policies in Latin America.
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Bibliographic InfoPaper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number IDB-WP-384.
Date of creation: Mar 2013
Date of revision:
Other versions of this item:
- Luis Felipe Céspedes & Roberto Chang & Andrés Velasco, 2013. "Is Inflation Targeting Still on Target?: The Recent Experience of Latin America," IDB Publications 80688, Inter-American Development Bank.
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-23 (All new papers)
- NEP-CBA-2013-03-23 (Central Banking)
- NEP-LAM-2013-03-23 (Central & South America)
- NEP-MAC-2013-03-23 (Macroeconomics)
- NEP-MON-2013-03-23 (Monetary Economics)
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