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Inflation Targeting in Armenia: Monetary Policy in Transition


  • King Banaian

    () ([1] Department of Economics, St. Cloud State University, 386 Stewart Hall, 720 4th Ave.S., St. Cloud, Minnesota 56301, USA.
    [2] Armenian International Policy Research Group, 6303 Massachusetts Avenue, Bethesda, MD 20816, USA.)

  • David M Kemme

    () (Department of Economics, University of Memphis, Memphis, TN 38152, USA.)

  • Grigor Sargsyan

    () ([1] 2Armenian International Policy Research Group, 6303 Massachusetts Avenue, Bethesda, MD 20816, USA. [2] 4Central Bank of Armenia, 6 Vazgen Sargsyan, St. Yerevan 375010, Armenia.)


As the monetary and financial systems in transition economies have evolved so have monetary policies. Many central banks have followed a course from exchange rate targeting, to targeting monetary aggregates to targeting inflation. We examine the development of monetary policy in Armenia, a small, open transition economy that adopted inflation targeting in January 2006. First, we review monetary policy in Armenia. Then we evaluate the capacity of the Central Bank of Armenia to implement inflation targeting. Finally, we estimate and simulate reaction functions to evaluate the effectiveness of monetary policy. We find that the Central Bank may have been overly restrictive. Comparative Economic Studies (2008) 50, 421–437. doi:10.1057/ces.2008.22

Suggested Citation

  • King Banaian & David M Kemme & Grigor Sargsyan, 2008. "Inflation Targeting in Armenia: Monetary Policy in Transition," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 50(3), pages 421-437, September.
  • Handle: RePEc:pal:compes:v:50:y:2008:i:3:p:421-437

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    Cited by:

    1. Ivrendi, Mehmet & Guloglu, Bulent, 2010. "Monetary shocks, exchange rates and trade balances: Evidence from inflation targeting countries," Economic Modelling, Elsevier, vol. 27(5), pages 1144-1155, September.

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