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Improving the Monetary Policy Frameworks in Central America

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  • International Monetary Fund
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    Abstract

    Several Central American (CADR) countries with independent monetary policies are strengthening their monetary frameworks and some have implemented or are moving towards inflation targeting (IT) regimes. Strengthening the monetary policy frameworks of CADR is key to improving the effectiveness of monetary policy. The paper reviews the literature on the reforms needed for strengthening the monetary policy frameworks, and examines the experiences of IT countries, Chile, Peru, and Uruguay to help distill lessons for CADR. It also constructs an index to measure the relative strength of the monetary policy framework of CADR countries.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/245.

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    Length: 38
    Date of creation: 01 Oct 2011
    Date of revision:
    Handle: RePEc:imf:imfwpa:11/245

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    Related research

    Keywords: Inflation targeting; Latin America; monetary policy; inflation; central bank; price stability; reserve requirements; monetary policy frameworks; monetary policy framework; foreign exchange; monetary fund; foreign currency; monetary frameworks; monetary base; inflation target; money market; average inflation; lower inflation; monetary policy regime; government securities; open market operations; treasury bonds; liquidity management; monetary policy instruments; monetary instruments; monetary framework; financial stability; inflation objective; aggregate demand; annual inflation; monetary program; monetary aggregate; monetary policy decisions; monetary reforms; inflation forecasts; inflation rates; monetary policy objectives; monetary stability; monetary targets; real interest rate; monetary policy independence; monetary data; macroeconomic stability; monetary policy rule; independent monetary policy; inflation rate; intermediate monetary targets; monetary policy strategy; inflation targeting regime; forecasting inflation; monetary transmission mechanism; monetary policy strategies; monetary conditions; monetary decisions; monetary policy implementation; monetary policies; long-term interest rates; price inflation; minimum reserve requirements; rediscount rate; monetary transmission; money demand; reserve requirement; transmission of monetary policy; monetary law; inflation response; terms of trade; terms of trade shocks; inflationary pressures; treasury securities; monetary instrument; independent monetary policies; variable inflation; price level; inflation performance; monetary objective; monetary target;

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    1. Mishkin, Frederic S. & Savastano, Miguel A., 2001. "Monetary policy strategies for Latin America," Journal of Development Economics, Elsevier, Elsevier, vol. 66(2), pages 415-444, December.
    2. Inci Ötker & Charles Freedman, 2010. "Important Elements for Inflation Targeting for Emerging Economies," IMF Working Papers 10/113, International Monetary Fund.
    3. Frederic S. Mishkin, 2011. "Monetary Policy Strategy: Lessons from the Crisis," NBER Working Papers 16755, National Bureau of Economic Research, Inc.
    4. Leonardo Leiderman & Rodolfo Maino & Eric Parrado, 2006. "Inflation Targeting in Dollarized Economies," Working Papers Central Bank of Chile, Central Bank of Chile 368, Central Bank of Chile.
    5. Charles Freedman & Douglas Laxton, 2009. "Why Inflation Targeting?," IMF Working Papers 09/86, International Monetary Fund.
    6. Dramane Coulibaly & Hubert Kempf, 2010. "Does Inflation Targeting decrease Exchange Rate Pass-through in Emerging Countries ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00497446, HAL.
    7. Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," World Bank Economic Review, World Bank Group, World Bank Group, vol. 6(3), pages 353-98, September.
    8. Jeffrey A. Frankel, 2010. "Monetary Policy in Emerging Markets: A Survey," NBER Working Papers 16125, National Bureau of Economic Research, Inc.
    9. Scott Roger, 2009. "Inflation Targeting At 20," IMF Working Papers 09/236, International Monetary Fund.
    10. Inci Ötker & Charles Freedman, 2009. "Country Experiences with the Introduction and Implementation of Inflation Targeting," IMF Working Papers 09/161, International Monetary Fund.
    11. Carlos Garcia & Jorge Restrepo & Scott Roger, 2009. "Hybrid Inflation Targeting Regimes," IMF Working Papers 09/234, International Monetary Fund.
    12. Goldstein, Eli, 2002. "International Environmental Economics: A Survey of the Issues: Edited by Gunter G. Schulze and Heinrich W. Ursprung (Oxford University Press, New York, 2001)," European Journal of Political Economy, Elsevier, Elsevier, vol. 18(4), pages 799-801, November.
    13. Coulibaly, D. & Kempf, H., 2010. "Does Inflation Targeting decrease Exchange Rate Pass-through in Emerging Countries?," Working papers, Banque de France 303, Banque de France.
    14. International Monetary Fund, 2010. "Weathering the Global Storm," IMF Working Papers 10/292, International Monetary Fund.
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