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Inflation Targeting in Peru: The Reasons for the Success

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  • Oscar Dancourt

    ( Departamento de Economía - Pontificia Universidad Católica del Perú)

Abstract

The Peruvian central bank took two major decisions in the early 2000s: implementing an inflation target system and accumulating sufficient foreign-exchange reserves. These two decisions have allowed the central bank to preserve macroeconomic stability in favorable or unfavorable international environments. The use and impact of the main monetary policy instruments over the period 2002-2013 is discussed; namely, the short term interest rate set by the central bank or reference interest rate, the reserve requirement ratio in local and foreign currencies and, finally, sterilized intervention in the foreign exchange market. The process of bank credit (de)dollarization is also reviewed. JEL Classification-JEL: E520, E580

Suggested Citation

  • Oscar Dancourt, 2014. "Inflation Targeting in Peru: The Reasons for the Success," Documentos de Trabajo / Working Papers 2014-386, Departamento de Economía - Pontificia Universidad Católica del Perú.
    • Handle: RePEc:pcp:pucwps:wp00386
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    File URL: http://files.pucp.edu.pe/departamento/economia/DDD386.pdf
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    Cited by:

    1. Jhonatan Portilla & Gabriel Rodríguez & Paul Castillo B., 2022. "Evolution of Monetary Policy in Peru: An Empirical Application Using a Mixture Innovation TVP-VAR-SV Model [Metas de Inflación en Una Economía Dolarizada: La Experencia Del Perú]," CESifo Economic Studies, CESifo Group, vol. 68(1), pages 98-126.
    2. repec:udc:esteco:v:44:y:2017:i:2:p:97-124 is not listed on IDEAS
    3. Castellares, Renzo & Toma, Hiroshi, 2020. "Effects of a mandatory local currency pricing law on the exchange rate pass-through," Journal of International Money and Finance, Elsevier, vol. 106(C).
    4. Esther Barros-Campello & Carlos Pateiro-Rodríguez & J. Venancio Salcines-Cristal & Carlos Pateiro-López, 2017. "El esquema de objetivos de inflación: Evidencia para América Latina (1999-2015)," Estudios de Economia, University of Chile, Department of Economics, vol. 44(2 Year 20), pages 223-250, December.
    5. Pozo, Jorge, 2019. "Capital Flows and Bank Risk-Taking," Working Papers 2019-017, Banco Central de Reserva del Perú.
    6. Josef C. Brada & Jan KubÃ­Ä ek & Ali M. Kutan & Vladimír Tomšík, 2015. "Inflation Targeting: Insights from Behavioral Economics," Eastern European Economics, Taylor & Francis Journals, vol. 53(5), pages 357-376, September.
    7. Syed Jaffar Abbas & Noman Arshed, 2023. "Examining Determinants of Regional Inflation Heterogeneity — A Robust Panel Data Analysis," SAGE Open, , vol. 13(4), pages 21582440231, December.
    8. Libman, Emiliano, 2018. "Asymmetric monetary and exchange-rate policies in Latin American countries that use inflation targeting," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.

    More about this item

    Keywords

    Política monetaria; tasa de interés; regla de Taylor; intervención esterilizada;
    All these keywords.

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