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Inflation Pressures and Monetary Policy Options in Emerging and Developing Countries-A Cross Regional Perspective


Author Info

  • Inci Ötker
  • David Vávra
  • Francisco F. Vázquez
  • Luis Ignacio Jácome
  • Karl Friedrich Habermeier
  • Kotaro Ishi
  • Alessandro Giustiniani
  • Turgut Kisinbay


This paper analyzes the monetary policy response to rising inflation in emerging and developing countries associated with the food and oil price shocks in 2007 and the first half of 2008. It reviews inflation developments in a sample of countries covering all regions and a broad range of monetary and exchange rate policy regimes; discusses the underlying causes of inflation; provides a synthesis of policy responses taken against the background of the conflicting objectives and trade-offs, the uncertainties regarding the nature of the shocks, and the additional challenges brought on by the global financial turmoil; and presents considerations for policy.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/1.

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Length: 78
Date of creation: 01 Jan 2009
Date of revision:
Handle: RePEc:imf:imfwpa:09/1

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Keywords: Emerging markets; Developing countries; Inflation targeting; Exchange rate regimes; External shocks; Oil prices; inflation; monetary policy; central bank; aggregate demand; reserve requirements; inflation target; inflation targeting framework; rising inflation; rise in inflation; monetary fund; inflation rates; increase in inflation; price stability; reserve requirement; real interest rates; inflationary pressures; lower inflation; monetary transmission; actual inflation; financial stability; monetary policy regimes; liquidity management; money market; terms of trade; money supply; monetary aggregate; monetary targeting; monetary aggregates; inflation rate; change in inflation; monetary transmission mechanism; monetary policy transparency; money markets; inflationary impact; national bank; inflation performance; monetary framework; nominal interest rates; monetary policy framework; monetary policy implementation; open market operations; monetary policy decisions; low inflation; transmission of monetary policy; independent monetary policy; average inflation; monetary stance; real wages; monetary instruments; foreign exchange; inflation forecasts; monetary regime; inflationary shock; cash management; marginal reserve requirements; monetary policy autonomy; reduction in inflation; compulsory reserve requirements; foreign currency; monetary policy instruments; monetary regimes; monetary policy frameworks; non-monetary measures; inflation objective; local currencies; monetary transparency; monetary authority; inflationary consequences; monetary aggregate target; monetary management; alternative monetary policy frameworks; monetary policy transmission mechanism; real exchange rates; real rates; increase in interest rates; inflation concerns; restrictive monetary policies; marginal reserve requirement; monetary program; monetary stability; monetary policy operations; inflation targeting regime; general level of prices; monetary policies; monetary measures; high inflation; real output; inflationary pressure;

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Cited by:
  1. de Carvalho Filho, Irineu, 2011. "28 Months Later: How Inflation Targeters Outperformed Their Peers in the Great Recession," MPRA Paper 29100, University Library of Munich, Germany.
  2. Pourroy, Marc, 2012. "Does exchange rate control improve inflation targeting in emerging economies?," Economics Letters, Elsevier, Elsevier, vol. 116(3), pages 448-450.
  3. de Carvalho Filho, Irineu, 2010. "Inflation Targeting and the Crisis: An Empirical Assessment," MPRA Paper 19960, University Library of Munich, Germany.
  4. Salas, Jorge, 2009. "¿Qué explica las fluctuaciones de la inflación en el Perú en el periodo 2002-2008? Evidencia de un análisis VAR estructural," Revista Estudios Económicos, Banco Central de Reserva del Perú, Banco Central de Reserva del Perú, issue 16, pages 9-36.
  5. International Monetary Fund, 2012. "Global Food Price Inflation and Policy Responses in Central Asia," IMF Working Papers 12/86, International Monetary Fund.
  6. Juan Carlos Berganza & Carmen Broto, 2011. "Flexible inflation targets, forex interventions and exchange rate volatility in emerging countries," Banco de Espa�a Working Papers 1105, Banco de Espa�a.
  7. International Monetary Fund, 2012. "Inflation Responses to Commodity Price Shocks," IMF Working Papers 12/225, International Monetary Fund.
  8. Siddig, Khalid H.A. & Grethe, Harald, 2012. "International Price Transmission In Cge Models: How To Reconcile Econometric Evidence And Endogenous Model Response?," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012, German Association of Agricultural Economists (GEWISOLA) 137388, German Association of Agricultural Economists (GEWISOLA).
  9. Nir Klein, 2012. "Estimating the Implicit Inflation Target of the South African Reserve Bank," IMF Working Papers 12/177, International Monetary Fund.


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