A Decade of Inflation Targeting in Chile: Developments, Lessons, and Challenges
Chile was among the first countries in the world to adopt a monetary framework based on an explicit, publicly announced, annual inflation target, when the term "inflation targeting" had not been even formalized. The country’s inflationary past suggested to combine tough inflation targeting parameters (to enhance the Central Bank’s reputation) and a gradual transition from moderately high inflation to a long-run inflation goal of 3%. After attaining this long-run objective in 1999 and a reputation of inflation-averse, the Central Bank of Chile has moved toward flexibility along the credibility-flexibility trade-off. Finally, having a third objective in the form of an asymmetric threshold for the current-account deficit was reflected in some episodes during which the implicit short-run output stabilization objective was made less important. Notwithstanding the success in reducing inflation during the 90s, without apparently paying real costs, the current inflation target regime faces a few challenges in its quest for keeping a low and stable inflation.
Volume (Year): 4 (2001)
Issue (Month): 1 (April)
|Contact details of provider:|| Postal: |
Phone: (562) 670 2000
Fax: (562) 698 4847
Web page: http://www.bcentral.cl/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Calvo, Guillermo A. & Mendoza, Enrique, 1998. "Empirical Puzzles of Chilean Stabilization Policy," Working Papers 98-02, Duke University, Department of Economics.
- Mahadeva, Lavan & Gabriel Sterne, 2002.
"Inflation Targets as a Stabilisation Device,"
Royal Economic Society Annual Conference 2002
134, Royal Economic Society.
- Frederic S. Mishkin & Klaus Schmidt-Hebbel, 2001.
"One decade of inflation targeting in the world : What do we know and what do we need to know?,"
Working Papers Central Bank of Chile
101, Central Bank of Chile.
- Frederic S. Mishkin & Klaus Schmidt-Hebbel, 2001. "One Decade of Inflation Targeting in the World: What Do We Know and What Do We Need to Know?," NBER Working Papers 8397, National Bureau of Economic Research, Inc.
- Batini, Nicoletta & Nelson, Edward, 2000.
"Optimal Horizons for Inflation Targeting,"
Working Paper Series
103, Sveriges Riksbank (Central Bank of Sweden).
- Nicoletta Batini & Edward Nelson, 1999. "Optimal Horizons for Inflation Targeting," Computing in Economics and Finance 1999 1052, Society for Computational Economics.
- Nicoletta Batini & Edward Nelson, 2000. "Optimal horizons for inflation targeting," Bank of England working papers 119, Bank of England.
- Juan Pablo Medina & Rodrigo Valdés, 2000.
"Optimal Monetary Policy Rules Under Inflation Range Targeting,"
Working Papers Central Bank of Chile
61, Central Bank of Chile.
- Juan Pablo Medina & Rodrigo O. Valdés, 2002. "Optimal Monetary Policy Rules under Inflation Range Targeting," Central Banking, Analysis, and Economic Policies Book Series, in: Norman Loayza & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series (ed.), Monetary Policy: Rules and Transmission Mechanisms, edition 1, volume 4, chapter 5, pages 095-116 Central Bank of Chile.
- Medina, J.P. & Valdes, R., 2000. "Optimal Monetary Policy Rules Under Inflation Range Targeting," Papers 61, Cambridge - Risk, Information & Quantity Signals.
- 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.
- Taylor, John B, 1979. "Staggered Wage Setting in a Macro Model," American Economic Review, American Economic Association, vol. 69(2), pages 108-13, May.
- Stephen G. Cecchetti & Michael Ehrmann, 1999.
"Does Inflation Targeting Increase Output Volatility? An International Comparison of Policymakers' Preferences and Outcomes,"
NBER Working Papers
7426, National Bureau of Economic Research, Inc.
- Stephen G. Cecchetti & Michael Ehrmann, 2002. "Does Inflation Targeting Increase Output Volatility?: An International Comparison of Policymakers' Preferences and Outcomes," Central Banking, Analysis, and Economic Policies Book Series, in: Norman Loayza & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series (ed.), Monetary Policy: Rules and Transmission Mechanisms, edition 1, volume 4, chapter 9, pages 247-274 Central Bank of Chile.
- Stephen Cecchetti & Michael Ehrmann, 2000. "Does Inflation Targeting Increase Output volatility? An International Comparison of Policy Maker's Preferences and Outcomes," Working Papers Central Bank of Chile 69, Central Bank of Chile.
- Laurence Ball & N. Gregory Mankiw & David Romer, 1988. "The New Keynsesian Economics and the Output-Inflation Trade-off," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 1-82.
- Vittorio Corbo, 1998. "Reaching One-Digit Inflation: The Chilean Experience," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 123-163, November.
- Jeffrey A. Frankel, 1999. "No Single Currency Regime is Right for All Countries or At All Times," NBER Working Papers 7338, National Bureau of Economic Research, Inc.
- Klaus Schmidt-Hebbel & Luis Serven, 2000. "Policy Shifts and External Shocks in Chile Under Rational Expectations," Econometric Society World Congress 2000 Contributed Papers 1098, Econometric Society.
When requesting a correction, please mention this item's handle: RePEc:chb:bcchec:v:4:y:2001:i:1:p:35-62. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Claudio Sepulveda)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.