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Inflation Targeting: The Recent International Experience

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Abstract

In the years since the 2006 renewal of Canada’s inflation-control agreement, monetary policy regimes have faced significant shocks, including the global economic and financial crisis. This article reviews the recent experience with inflation targeting, including the debate about the appropriate role of monetary policy in maintaining financial stability. In the aftermath of the crisis, both the United States and Japan adopted numerical inflation objectives. Overall, a flexible inflation-targeting framework, supported by central bank independence, accountability and clear communications, remains a robust monetary policy regime for promoting economic welfare.

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  • Robert Lavigne & Rhys R. Mendes & Subrata Sarker, 2012. "Inflation Targeting: The Recent International Experience," Bank of Canada Review, Bank of Canada, vol. 2012(Spring), pages 16-28.
  • Handle: RePEc:bca:bcarev:v:2012:y:2012:i:spring12:p:16-28
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    File URL: http://www.bankofcanada.ca/wp-content/uploads/2012/05/boc-review-spring12-lavigne.pdf
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    1. Refet S. Gürkaynak & Andrew T. Levin & Eric T. Swanson, 2006. "Does inflation targeting anchor long-run inflation expectations? evidence from long-term bond yields in the U.S., U.K., and Sweden," Working Paper Series 2006-09, Federal Reserve Bank of San Francisco.
    2. Refet Gurkaynak & Andrew T. Levin & Andrew N. Marder & Eric T. Swanson, 2007. "Inflation targeting and the anchoring of inflation expectations in the western hemisphere," Economic Review, Federal Reserve Bank of San Francisco, pages 25-47.
    3. de Carvalho Filho Irineu E, 2011. "28 Months Later: How Inflation Targeters Outperformed Their Peers in the Great Recession," The B.E. Journal of Macroeconomics, De Gruyter, vol. 11(1), pages 1-46, July.
    4. Rose Cunningham & Brigitte Desroches & Eric Santor, 2010. "Inflation Expectations and the Conduct of Monetary Policy: A Review of Recent Evidence and Experience," Bank of Canada Review, Bank of Canada, vol. 2010(Spring), pages 13-25.
    5. Anna Nordstrom & Scott Roger & Mark R. Stone & Seiichi Shimizu & Turgut Kisinbay & Jorge Restrepo, 2009. "The Role of the Exchange Rate in Inflation-Targeting Emerging Economies; Targeting Emerging Economies," IMF Occasional Papers 267, International Monetary Fund.
    6. Carl E. Walsh, 2009. "Inflation Targeting: What Have We Learned?," International Finance, Wiley Blackwell, vol. 12(2), pages 195-233, August.
    7. Schmidt-Hebbel, Klaus & Tapia, Matias, 2002. "Inflation targeting in Chile," The North American Journal of Economics and Finance, Elsevier, vol. 13(2), pages 125-146, August.
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    Cited by:

    1. Rhys Mendes, 2013. "Understanding commodity price cycles in emerging Asia and their implications for monetary policy," BIS Papers chapters,in: Bank for International Settlements (ed.), Globalisation and inflation dynamics in Asia and the Pacific, volume 70, pages 67-69 Bank for International Settlements.
    2. Oleksiy Kryvtsov & Rhys R. Mendes, 2015. "The Optimal Level of the Inflation Target: A Selective Review of the Literature and Outstanding Issues," Discussion Papers 15-8, Bank of Canada.
    3. Ianthi Vayid, 2013. "Central Bank Communications Before, During and After the Crisis: From Open-Market Operations to Open-Mouth Policy," Staff Working Papers 13-41, Bank of Canada.

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