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Inflation Targeting in the Context of IMF-Supported Adjustment Programs

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Author Info

  • Gerd Schwartz
  • Pau Rabanal
  • Mario I. Bléjer
  • Alfredo Mario Leone

Abstract

This paper argues that the IMF's traditional monetary conditionality-a ceiling on net domestic assets of the central bank and a floor on its net international reserves-should be adapted in IMF-supported adjustment programs with countries which have a framework of explicit inflation targets for the implementation of monetary policy. This adaptation should aim at enhancing correspondence and consistency between the monetary objectives of the central bank and the targets established under the IMF-supported adjustment program, as well as between the different instruments used to achieve the policy objectives and targets. The paper reviews various general options in this regard, and, using the case of Brazil as an example, demonstrates how these options may be implemented in practice.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 01/31.

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Length: 24
Date of creation: 01 Mar 2001
Date of revision:
Handle: RePEc:imf:imfwpa:01/31

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Keywords: Inflation targeting; Conditionality;

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Cited by:
  1. John Hawkins, 2005. "Globalisation and monetary operations in emerging economies," BIS Papers chapters, in: Bank for International Settlements (ed.), Globalisation and monetary policy in emerging markets, volume 23, pages 59-80 Bank for International Settlements.
  2. William R. Cline, 2003. "Restoring economic growth in Argentina," Policy Research Working Paper Series 3158, The World Bank.
  3. Toprak, Metin, 2001. "Yükselen Piyasalarda Finansal Kriz
    [Financial Crises in Emerging Markets]
    ," MPRA Paper 9092, University Library of Munich, Germany, revised 2001.
  4. James Heintz & Gerald Epstein, 2006. "Monetary Policy and Financial Sector Reform For Employment Creation and Poverty Reduction in Ghana," Working Papers wp113, Political Economy Research Institute, University of Massachusetts at Amherst.
  5. Easterly, William, 2006. "An identity crisis? Examining IMF financial programming," World Development, Elsevier, vol. 34(6), pages 964-980, June.
  6. Tony Cavoli & Ramkishen S. Rajan, 2006. "Inflation Targeting Arrangements In Asia : Exploring The Role Of The Exchange Rate," Macroeconomics Working Papers 22564, East Asian Bureau of Economic Research.
  7. Epstein, Gerald & Heintz, James & Ndikumana, Léonce & Chang, Grace, 2010. "Employment, poverty and economic development in Madagascar : a macroeconomic framework," ILO Working Papers 455446, International Labour Organization.
  8. Brigitte Granville & Sushanta Mallick*, 2006. "Integrating poverty reduction in IMF-World Bank Models," Working Papers id:502, eSocialSciences.
  9. Victor, Olivo, 2007. "El Régimen de Metas de Inflación en Brasil: Breve Descripción y Evaluación de su Desempeño
    [Brazil's Inflation Targeting Regime: Brief Description and Evaluation of its Performance]
    ," MPRA Paper 41405, University Library of Munich, Germany.
  10. Gerald Epstein & James Heintz & Léonce Ndikumana & Grace Chang, 2011. "Employment, Poverty and Economic Development in Madagascar," Published Studies ndikumana_ilo2010, Political Economy Research Institute, University of Massachusetts at Amherst.
  11. Epstein, Gerald, 2009. "Rethinking monetary and financial policy : practical suggestions for monitoring financial stability while generating employment and poverty reduction," ILO Working Papers 434439, International Labour Organization.
  12. Gerald Epstein & James Heintz, 2006. "Monetary Policy and Financial Sector Reform for Employment Creation and Poverty Reduction in Ghana," Country Study 2, International Policy Centre for Inclusive Growth.
  13. Douglas Laxton & Andrew Berg & Philippe D Karam, 2006. "A Practical Model-Based Approach to Monetary Policy Analysis--Overview," IMF Working Papers 06/80, International Monetary Fund.
  14. James M. Boughton, 2004. "The IMF and the Force of History: Ten Events and Ten Ideas that Have Shaped the Institution," IMF Working Papers 04/75, International Monetary Fund.
  15. Gerald Epstein, 2009. "Rethinking Monetary and Financial Policy: Practical suggestions for monitoring financial stability while generating employment and poverty reduction," Published Studies ilo_epstein11_09, Political Economy Research Institute, University of Massachusetts at Amherst.

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